Interesting article in forbes...

Novo Nordisk And The Danish Delusion
David Kliff David Kliff, Contributor

There was a time when I considered Novo Nordisk (NVO) to be the preeminent diabetes drug company. While long a global power the company got off to a rocky start here in the US but thanks to solid leadership the company eventually overtook Lilly (LLY) in the U.S. insulin market. Today however it is a much different story as Lilly has recognized that the insulin market, both short and long acting, is transforming itself into a commodity market where price trumps performance. The GLP-1 is also undergoing this transition albeit at a slower rate.


This is what makes the comments made by Novo CEO Lars Sorensen so stunning. When interviewed by Reuters, Sorensen states, “We need to price innovation at a premium, otherwise we will not be able to fund innovation going forward.” Well we hate to burst Mr. Sorensen’s bubble but that dog just don’t hunt no more. The fact is that even Novo’s latest insulin product, Tresiba, which is delayed at the FDA, isn’t all that innovative and quite frankly does not deserve to be reimbursed at a premium.

These comments are even more disturbing when one realizes that Novo actually is operating under the delusion that premium reimbursement is still within its reach. Unlike everyone else in the diabetes drug space, Novo believes that the coming of biosimilar short-acting insulin or the coming Lantus knockoff from Lilly won’t strengthen the already strong hand held by payors. They seem to believe that payors will pay a premium for a new product just because it is new, when in reality payors are recognizing what everyone else has, in that these so-called new drugs don’t offer a compelling case for premium reimbursement.

The insulin market is just the beginning, as the GLP-1 market will also follow this path, a market, which is critical to Novo. Here too, Lilly could be the instigator of a price war as they too have a long-acting GLP-1 on the way and will use price as their primary weapon to gain preferred formulary placement. A move which will likely be anticipated by Bristol Myers Squibb (BMY) who will surly fight back and once again give payors even more power to play all the companies against each other.

Regarding the GLP-1 market Mr. Sorensen stated; “We could have priced ourselves into the (Express Scripts) contract had we wanted to, but we believe Victoza is a better product and therefore demands a premium.” Really a premium price for what is basically a me-too product whose only so-called advantage is one less injection per day. We realized this is getting a bit redundant but it’s time everyone realizes that payors do not care about patient convenience and that it’s easier to take one injection per day versus two per day. This is even less important when payors also know there is a once-weekly product which they can reimburse at practically at the same level as a twice daily product.

Some may say that the delusion Novo is operating under isn’t hurting the company all that much as based on history the company has performed well. While this is true it is also extraordinarily naïve, as past performance means nothing in the quickly changing landscape of diabetes. Should this delusion continue it would not surprise me if the tables turned and Lilly came back to overtake Novo. In a stunning repeat of history it was Lilly who back in the day thought they were invincible only to see Novo come along and eat their lunch. Today it seems the roles are reversed and it is Novo who is ignoring the facts, is either too arrogant, not smart enough or both to see what’s going on in the marketplace.


Perhaps the scariest part here is that Mr. Sorensen has extended his mandatory retirement from age 62 to 65. A cynic just might call this the ultimate in hubris, while others might believe that he is intent on making the job for whoever succeeds him easier by screwing things up now. For the moment Diabetic Investor will give Mr. Sorensen a pass hoping that he really does see what’s going on and is just trying to put up a brave face for Novo stakeholders. For if this is not the case then he is truly delusion and Novo stakeholders better watch out, all they need to do is look to history and see what Novo did to Lilly before Lilly found religion.

David Kliff is editor and publisher of the Diabetic Investor newsletter.

 

I saw that article as well. I found it troubling the way the author ripped NN to shreds. What is the authors back ground? Is he an analyst, trader or just another blogger who's paid by number of visits/words.

He never once mentioned our 61 quarters of double digit growth. All he mentioned was MAYBE we would lose dominance in the US. He never mentioned NN hiring 400 more skilled Reps in the US. He obviously doesn't know EL is completely out manned in the field. We have 4, soon to be 5 Reps per 2 Lilly Reps! Share of voice win-NN. We also have EDCS's and DE driving business thru the specialty channel and in offices. These Reps guarantee we maintain our top spot. I don't believe the Caremark/Express Scripts garbage will have any effect on our share at all.

Wall street gets everything wrong. The large drop last week and smaller drop today illustrate that fact. We're the premier pharmaceutical company in the industry. Our Reps dominate, management dominate, and ELT team are performing extremely well. I say, buy more stock, sell harder, and hold others accountable are the best bet.

 

I thought this was a great article. To the poster above, the truth hurts. That is the reality of the market today...

 

NNI is arrogant? Really? Does this author not realize that Novo only hires "the best of the best", and that docs will soon love having 5 reps calling on them?

More "share of voice" is better? LMFAO

 

I hate to say it, but Novo is arrogant. Arrogance was a huge contributing factor towards IBM's great collapse in the early 1990's. Arrogant IBM Exec's always thought that MicroSoft's Windows Operating System didn't have a snowball's chance in hell of crushing IBM's OS2 in the marketplace. But it did. Windows is ubiquitous, OS2 is gone forever. Today's IBM is a gutted shell of it's once so powerful self.

As for all those quarters of double digit growth, everybody knows that past performance is not a guarantee of future results. There's a stark reality in the saying "Price is King". Payor's understand that and they'll definitely leverage it. I suspect price competition in the marketplace will force Novo to take the premium price tag off it's products, or it wont survive.

 

I don't know if it's arrogance on Sorensen's part. I'd say it's more hubris than it is arrogance.

I thinks it's OK for Lars Sorensen to think of his company's product as commanding a premium price. He should do that, but he needs to understand the price the market is willing pay for them is another matter. I have a neighbor that has his house for sale. His house is essentially the same as some others on my street, yet he has it priced about $100,000 higher than comparable homes that are for sale in my neighborhood. It just sits on the market unsold while other houses like his have sold. If he truly wants to sell it, sooner or later he'll be forced into caving in to the local real estate market dynamics. So will Lars.

 

Truth hurts. This write up is spot on, unfortunately.

 

Dont be surprised if this author gets exposed for being a paid ghost-writer for one of our competitors. Forbes readership probably hasn't grown in 3 years because of slanted trash pieces.

Conversely, Novo has experienced a mind-blowing 44+ consecutive quarters of double digit growth. Did he happen to mention that little tidbit in his poorly written article? Nope. Hmmmmmm

 

You're still bent out of shape because this same author ripped Novo in Pharmalot for their decision of having Paula Deen shill for Victoza. It was a poor decision on Novo's part. This author, as well as most of the civilized world, called Novo out on this poor choice.

We all know how that partnership ended up....

I am a little surprised that Novo allowed this article to be published. Novo loves to manipulate the media almost as much as clinical trial data. At Novo, it's all sunshine and blue skies - all the time...

 

Funny how you try to impeach the author's integrity and discredit forbes for writing/publishing an article that isn't too far from the truth. You don't think NN is arrogant? Not saying they hold a monopoly on arrogance so don't get your panties in a bunch.

Funny how you attack the person/magazine not the content! NN has a history of attacks, first with Lantus then Byetta, now reporters.

You don't have a rebuttal to the content? Do you agree and are showing your anger at the author for writing the truth.

You don't believe insulin is becoming a commodity? When bio-equivalent lantus hits the market you don't think it'll impact current and future branded meds?

I'm not sure Gliptins are going down the same path. A highly doubt anyone launching a new Gliptin or SGLT-2 for that matter won't intro product at a premium price. But the reality is, Levemir and Novolog make up most of NN sales. Sig. competition to these two products will hurt badly. Increased low cost competition, 400 new sales reps, and hostile MHC contracting make the future murky.

 

Sunshine and blue skies are a result of our 10 consecutive years of double digit growth. Other companies cut their field force, we add field forceS. This guy's favorite company (Love Lilly much, dude?) has done WHAT in the past years? Oh, that's right: other than getting fined nine figures for lying about one of their psych meds, they've done doodly squat.

Being lead dog has it's downside. Hey, but I'll take this guys hateration along with my $46,000 bonus, my fine German ride, and my gift-wrapped Christmas Apple "toy". Lets go in the Lilly site and see what kind of cash they're pullin down, shall we?

Dude's a shnook! Who cares what he writes?

 

David Kliff isn't exactly a "shnook" and your naivete is showing bigtime!

Kliff is the author of Diabetic Investor. It's an electronic newsletter devoted exclusively to the business of diabetes. Diabetic Investor is considered THE source of information when it comes to the growing diabetes marketplace. He's a frequent guest on CNBC, and has also been featured in many respected media outlets including the Wall Street Journal, The Washington Post, Money Magazine, Los Angeles Times and Forbes. He's also a type 1 diabetic. He started DI as a result of being diagnosed with diabetes.

He knows of what he speaks about the diabetes space. You dont.

 

Hey guys! Dontcha just love this idiot?? The overwhelming consensus here is that the article is spot on. We're all lying, but he's not! The "dude" is a twenty-something who shouldn't have left his old job at Best Buy cuz he hasn't mentally matured yet!

You keep on rockin' Dude! You'll grow up someday. LOL

 

Yeah... it's HARD to LOSE ground in the stock market on a record day like Friday, when all of our closest competitors and the major markets are UP, and Novo takes a left-turn. Something's rotten in Denmark! Pretty sure it's the stench of arrogance and greed.

 

By the way Dude, how many times have YOU been seen on CNBC, or published in The WSJ, or Forbes, or The NY Times, or The Washington Post?

What's that? You haven't ever been seen on CNBC? You say you've never been pusbished anywhere other than here at asshole CP?

Oh. I thought so. That's alright. You keep on rockin' anyway.

 

This guy is a joke! Haters gonna hate. Remember, opinions are like assholes, everyone's got one.

 

Being quoted in liberal rags or on the Zionist-finded mainstream news does not mean that you're credible. It means that you're like-minded, and sling the swill they approve.

The guy is a hack. Our track record proves him wrong, again. I won't mention his name on here because I dont want to up his Q-rating!

 

"Journalism is printing what someone else does not want printed: everything else is public relations."
George Orwell

 

Zionist finded mainstream? Really? Did I just read that? Do you actually work for NN?

 

Sorry...it's really hard for me to agree with someone who's using the words "dontcha" and "cuz" when knocking someone else's maturity level. I'm assuming you work at Target and somehow saying someone else works at Best Buy is some sort of retail-store put-down. Sorry--help me out here. When you say 'you keep on rockin' Dude'.....is that good or bad?