A Rough Ride Despite Saxenda’s Success

Over the last four years, four new obesity meds gained approval and only one lived up to expectations in the marketplace – the Saxenda brand of liraglutide 3 mg from Novo Nordisk. The company reported quarterly results last week. Saxenda sales, growing impressively, are on track to surpass $200 million for the year. Net profit for the quarter grew 17%, and yet, the Novo Nordisk stock price plunged 15%.

The reason is simple. The market for diabetes drugs – especially insulin – is heading for a shakeup. Price competition for insulin is hitting hard. Over the last two decades, the price of insulin products grew steadily with the introduction of newer and more advanced forms. It also helped that generic competitors were not really possible because insulin is a complex biological product. The whole model of producing a chemically identical product just doesn’t work for biologicals.

But a new regulatory framework allows for the approval of “biosimilars.” These are biological products that are close enough to be considered biologically equivalent to a branded biological product. That framework was tucked away inside the Affordable Care Act to open up price competition on biological products that have gone off patent.

All of this hits Novo Nordisk hard because they sell a lot of insulin and pricing pressures are growing especially fast on insulin.

In the end, only innovation will provide strong growth. So Novo Nordisk is investing in obesity care innovation. In discussing the company’s prospects on Friday, Novo Nordisk said that it would expand its research into complications of obesity. Fatty liver disease is one of those targets.

Whether or not a particular company prospers does not ultimately matter so much. What matters greatly is the potential for investment in research to find solutions for people living with obesity.

More investment in obesity research can bring good news for people who are concerned about better options for obesity care. We hope it will.

Click here for more from FiercePharma and here for more from the Wall Street Journal. Click here for more on the collapse of insulin prices.

Ships in a Storm, oil painting by Ivan Aivazovsky / WikiArt

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October 31, 2016