By Eric Palmer
If you listen to the talk, the world diabetes market is fraught with peril. Novo Nordisk CEO Lars Rebien Sørensen speaks of stingy payers and global competition, while Sanofi ($SNY) told investors its diabetes drug sales will fall through 2018. But none of this has deterred insulin specialist Novo, which today kicked off one piece of a huge production buildup that all told will add more than 1,200 jobs to the drugmaker.
Novo ($NVO) today started construction on a DKK 2.1 billion ($307.8 million), 10,300-square-meter insulin filling and packaging plant at its site in Hillerød, Denmark. When complete in 2019, the facility will add 450 new jobs at the site where the Danish drugmaker already employs 1,900, Novo said in a statement.
“The investment in Hillerød underscores our long-term ambition to create and maintain jobs in Denmark,” Henrik Wulff, Novo’s head of product supply, said in a statement. “This year alone we have created 1,000 new jobs in Denmark.”
This plant is in addition to the $2 billion expansion that Sørensen announced in August, which includes Novo’s first U.S. ingredient plant, as well as a production facility in Måløv, Denmark. The $1.2 billion investment at its site in Clayton, NC, will lead to about 700 new jobs there and the Måløv plant another 100.
While Sørensen last week warned of global competition and pressure from payers in the U.S. and Europe, the company reported that in the first three quarters, sales were up 9% when the currency effects of the dollar were factored in, up 23% if not. They hit 79 billion kronor, or about $11.6 billion for the 9 months. Sales of its blockbuster GLP-1 med Victoza were up 39% despite new competition from Eli Lilly & Co.’s ($LLY) Trulicity. And next year, the drugmaker will add in sales of Novo’s long-acting insulin Tresiba, which the FDA approved in September after initially rejecting it in 2013 to await more safety data.
Tresiba goes up against Sanofi’s Lantus replacement, Toujeo, which the French drugmaker released in April. Novo feels good enough about Tresiba, and the U.S. market, to price it at a slight premium to Lantus, which has long been the best-selling insulin on the market, but which is under pressure.
Sanofi released earnings last week as well, reporting that revenues from its diabetes franchise were off 6.6% because of weaker sales of Lantus in the U.S., as well as biosimilar competition in Europe. Sanofi warned investors that revenues from its diabetes drugs will be off by 6% to 7% this year and decline an annualized 4% to 8% through 2018.