December 3, 2013 / 5:50 PM / in 4 years

Novo holding firm on U.S. contract prices despite pressure

COPENHAGEN (Reuters) - The loss of a major U.S. contract earlier this year has so far not resulted in any larger customer exodus, world number one insulin maker Novo Nordisk said on Tuesday.

The company is encountering growing push back on prices from healthcare insurers and governments, challenging its strategy of increasing prices and charging a premium for innovative medicines.

“We have 2,000 contracts in the U.S., so there will always be some that we win and some that we lose, but as far as I know we have no essential contracts up for negotiation that will affect us in 2014,” Chief Financial Officer Jesper Brandgaard told Reuters.

Losing a managed care contract with Express Scripts was a blow to Novo, and the company has said this will affect its 2014 growth rate.

Indeed, growing the Nordic region’s biggest company by value is getting tougher, especially after a decision by the U.S. Food and Drug Administration earlier this year to delay approval of Tresiba, Novo’s new long-acting insulin.

The setback opens the door to competition from Sanofi’s new insulin U300, just as Eli Lilly threatens Novo’s popular non-insulin diabetes drug Victoza with a potential rival called dulaglutide that may be superior.

“During 2014 we will be negotiating some of our contracts in the U.S., which may affect 2015 and onwards,” Brandgaard said.

Chief Executive Lars Rebien Sorensen added that Novo could forego some deals if required.

“By not winning some contracts (in the U.S.) you can actually win financially in the end,” he told the audience at Tuesday’s investor presentation in Copenhagen.

Reporting by Shida Chayesteh, editing by Terje Solsvik

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