The best drug is not always a guarantee for the best financial results

Novo Nordisk demonstrated to investors and analysts that the best and most advanced drug is not always the product which ensures the best financial results. The Denmark-based pharmaceutical giant recently launched on the market Tresiba, a novel, advanced insulin for the treatment of diabetes, with far higher efficacy than previous insulins. Novo’s managers had planned for Tresiba a price 60-70% higher than conventional insulins, however the market did not react as expected and the health systems would still cover and reimburse conventional insulins. Novo had to lower the guidance for Tresiba, which is now marketed in the EU at a price 10-20% higher than competitors Lantus and Levemir. The company had to announce 1,000 job cuts, so as to cope with the crisis created by the scaled-down business plan for Tresiba. Novo, however, does not intend to leave the diabetes business, which is growing at rocketing rates – suffice it to say that 12% of the US population has diabetes and the percentage is expected to reach 33% by 2050. Interestingly, Sanofi and Amgen experienced similar trends after commercializing novel drugs to control cholesterol – CPSK9 inhibitors – which have far higher efficacy than conventional drugs, but cost $14,000 per year, as opposed to the few euros charged for conventional statins (HMG-CoA inhibitors). Like with Tresiba, the market did not welcome the new drug and healthcare institutions are still buying and reimbursing statins.
(Source: WSJ)