Novo Nordisk (NVO) Faces Pricing Pressure and Competition

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We issued an updated report on Novo Nordisk A/SNVO on Oct 16.

Novo Nordisk's continued growth from Victoza and Tresiba as well as higher contributions from Saxenda and Xultophy are likely to be partly offset by the impact of lower realized prices in the Unites States, loss of exclusivity of products in hormone replacement therapy, and intensifying competition within the diabetes and biopharmaceuticals markets, besides macroeconomic conditions in many markets under International Operations.

Last month, Novo Nordisk announced plans to restructure its Research & Development (R&D) organization. Consequently, the company will lay off 400 employees from R&D roles in Denmark and China. The company is taking this step to focus on both core and new therapy areas. The company aims to speed up the expansion and diversification of its pipeline across serious chronic diseases.

The company will re-allocate and restructure resources to bring novel candidates. To ensure this, it will identify new therapeutic approaches based on external collaborations, which Novo Nordisk will accelerate via the establishment of a new Business Development unit in Cambridge, MA.

The company had also taken a similar step in 2016 to combat the challenging environment. Novo Nordisk had announced 1,000 job cuts to reduce operating costs, as the company was facing a challenging competitive environment.

The company also faces intense competition in the diabetes market, which is already crowded with a number of drugs. Merck and Co.'s MRK Januvia and Janumet (type II diabetes), Eli Lilly's LLY Trulicity (type II diabetes), Sanofi's  SNY Toujeo (type I and II diabetes) are already approved.  However, Victoza is slated to lose patent protection in the United States and the EU in 2023.

However, Novo Nordisk has a strong presence in the diabetes care market, with a global value market share of 27%. Novo Nordisk's top line is driven by strong performance of products like Victoza (liraglutide). The company plans to submit the results from the Ellipse trial to the FDA in the United States and the EMA in the EU in fourth-quarter 2018, seeking a label expansion and six months patent extension of Victoza related to the pediatric data in the United States and the EU.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: SNY , LLY , MRK , NVO

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