Novo needs weightier launches to fill Victoza’s shoes

Disappointing second-quarter sales of Novo Nordisk's GLP-1 agonists, Victoza and its successor Ozempic, raise questions.

Novo Nordisk’s daily GLP-1 agonist, Victoza, is already becoming less relevant in the face of more convenient competition. But sales figures released today suggest that the drug could decline faster than expected – and raise doubts about whether Novo’s new once-weekly GLP-1, Ozempic, will be able to step up.

Novo blamed rebating adjustments and the impact of Ozempic’s launch for disappointing second-quarter Victoza sales, but Ozempic also fell short of expectations. Executives defended their new product, saying it was still early days, but the Danish company needs to do better if it hopes to compete with Lilly’s once-weekly rival, Trulicity (see table below).

Novo is still optimistic that Ozempic will meet its 2018 revenue target of DKK1bn ($155m), but with sales so far this year totalling just $41m the product still has a long way to go. Overall, investors were unimpressed with the company's second-quarter figures, which were accompanied by a warning that US prices would likely dip next year. Novo shares dropped 6% today.

Weekly vs daily

In the increasingly tough diabetes space GLP-1 agonists represent the fastest-growing category, and once-daily Victoza is currently the king of this castle. But Novo has seen its market share erode since Lilly launched Trulicity in 2014, and currently each product holds just over 40% of the GLP-1 segment by volume.

Once-weekly Ozempic, launched in February, has put Novo on an equal footing with Lilly in terms of convenience, and the Danish company hopes to gain more ground with an oral version of semaglutide – the active ingredient of Ozempic – which could reach the market in 2020.

Still, current EvaluatePharma consensus has Novo’s projects playing catch-up to Trulicity in 2024, and the latest Ozempic sales figures will do nothing to change this outlook.

Battle of the GLP1 agonists
      Annual sales ($m)  
Product Company Status 2018e 2020e 2022e 2024e 12-mth change in 2022 forecast ($m)
Trulicity Lilly Marketed 2,872 3,858 4,407 4,726 +769
Ozempic Novo Nordisk Marketed 209 1,819 3,407 4,652 +1,497
Oral semaglutide  Novo Nordisk Phase III - 171 1,211 2,087 +399
Victoza Novo Nordisk Marketed 3,975 3,573 2,793 1,195 -963
Source: EvaluatePharma.

At least the GLP-1s look like they will escape the worst of the US pricing pressure squeezing the diabetes sector; Novo said lower average prices next year, after rebates, would mainly be driven by declines in the basal insulin category.

Still, the company admitted to putting up its list prices twice this year, a move that might not prove popular in the current political climate.   

“We have to compete in this market structure as it is,” Novo’s chief executive, Lars Fruergaard Jørgensen, said on the group’s earnings call today. “When we have to give rebate enhancement on a yearly basis the option we have is to work with list pricing – this is how we compete.”

He said that Novo’s list price increases were in line with its competitors, and acknowledged that the current system needed to change, but added: “We can’t do this on our own.”

Shrinking in obesity

In an effort to expand into less commoditised areas Novo has been developing a pipeline of obesity therapies – but things are not going smoothly here either.

The company today quietly discontinued two phase I projects: NN9499 and G530L/NN9030, whose prospects it was still touting earlier this year (Interview – Novo fattens up its obesity pipeline, March 7, 2018).

Novo insisted that economic reasons were behind its decision, and that there had been no safety issues with either candidate. Indeed, the company is planning on looking at NN9499 in other chronic diseases. And the group was keen to point out that it had started four phase III trials in the Step programme, testing injectable semaglutide in obesity, as expected.

However, with pressure in diabetes not letting up, Novo could have done with some fresh blood in obesity. For now everything still hinges on its GLP-1 franchise, and investors will want to see Ozempic sales pick up next quarter.

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