Analyse, 26. marts 2015, Karen Andersen
Novo Nordisk has decided to resubmit its applications for approval of next-generation insulin products Tresiba and Ryzodeg to the FDA, based on interim data from the DEVOTE cardiovascular outcomes study. Given management's previous comments about its refiling strategy, this decision implies that the interim data was strong enough to satisfy the FDA's concerns about any potential cardiovascular signal from previous, smaller trials. We had already anticipated that Novo would file in 2015 based on an interim analysis and gain approval in 2016 in the U.S. market, and we're not making any significant changes to our fair value estimate as a result of this news.
We think this decision supports our thesis that Novo possesses strong intangible assets in the field of biologic diabetes therapies, a key part of its wide moat. The likely approval of Tresiba in the U.S. around the end of the year (Novo plans to file for approval in April, with an expected six-month review) puts the firm in a good position to launch the product in early 2016, ahead of Lilly's biosimilar version of Sanofi's dominant basal insulin therapy Lantus. While Sanofi's own next-generation basal insulin Toujeo was approved in the U.S. in February and is set to launch in April, we think Tresiba is more likely to get a label that includes hypoglycemia benefits (which Toujeo did not). Overall, we see Novo's global insulin and diabetes care sales growing at an average rate of 8% annually over the next five years on a constant currency basis, allowing it to slightly grow its global insulin market share above the 41% level today.
Bulls and bears say
Bulls say
- The increased prevalence of obesity and patient conversion to pricier modern insulin offerings should expand the insulin market by more than 6% annually over the next five years, based largely on volume.
- With a promising pipeline full of next-generation insulins, Novo is well positioned to defend its formidable diabetes market share in the long run.
- Novo's prowess developing therapeutic proteins has led to the creation of a highly profitable line of biopharmaceutical products for hemophilia and other disorders, helping to diversify its top line and further boost margins.
Bears say
- Tresiba, Ryzodeg, and Xultophy won't reach the lucrative U.S. market until at least 2016, allowing Sanofi to continue to dominate with Lantus and introduce new insulin offering Toujeo in the interim.
- Novo and its insulin market peers have enjoyed tremendous U.S. pricing power in recent years, but the passing of the patent cliff and increased consolidation of PBMs could limit this power in the future.
- Novo's Victoza has been a strong growth driver, but exclusion from the Express Scripts formulary in 2014 and the introduction of other potent GLP-1 analogs could weigh on growth.
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