Novo Seen Missing Target of 40 Million Diabetics Treated by 2020

(Bloomberg) -- Novo Nordisk A/S expects to fall short of its ambitious goal of doubling the number of diabetics it treats by the end of the decade after the world's biggest insulin maker failed to win key government contracts.

The drugmaker, which for the past four years has touted a target of reaching 40 million patients by 2020, has been unsuccessful in its bids in some large markets, Niels Lund, vice president of health advocacy at Novo, said in an interview. He declined to provide specifics, though he pointed to a tougher climate in countries such as Brazil, Mexico and China as the company vies with rivals including Sanofi and Eli Lilly & Co.

“That's the reality of a competitive environment, and an increasingly competitive one,” according to Lund. Some government tenders can cover multiple years, with hundreds of thousands -- if not millions -- of patients at stake, so missing one or two can mean that “the numbers do not add up.” And winning or losing can come down to the difference of a few cents per treatment, he said.

The escalating competition comes as Bagsvaerd, Denmark-based Novo and rivals including France's Sanofi grapple with mounting pressure on prices of diabetes drugs in the U.S., their biggest market. Novo last month cited “adverse macroeconomic conditions” in several international markets as one of the factors behind its decision to pare its sales forecast for 2017.

Stretch Goal

The company had set the goal in 2013 as part of an effort to ensure the life-saving hormone gets to the people who need it. China and its international operations -- which excluded North America, Europe, Japan and South Korea -- would predominantly drive the growth in the number of patients it reaches, Novo said at that time.

Novo provided treatments to about 28 million people with diabetes last year, driven by sales of human insulin. But current projections show it won't be possible to hit the 2020 target, the drugmaker wrote in its latest annual report. The company had aimed to boost that number from about 20 million patients in 2010.

The goal “was a stretch target, a very ambitious target,” Lund said last week.

The company last year said it would ensure that low-cost human insulin is available in the least-developed countries, and lowered its ceiling on prices offered to governments and private distributors in those markets for 2017 to $4 a vial, or 10 to 15 cents per day for each patient. Last year, the cap for insulin treatments was 18 cents a day. Those limits don't necessarily reflect the price to consumers because of mark-ups by middlemen and other supply challenges.

The number of the least-developed countries buying insulin under Novo's discounted pricing policy fell to 22 last year from 32 two years earlier, according to its annual report. It's difficult to predict which countries will have tenders in a particular year, said Soraya Ramoul, director of Novo's Changing Diabetes program.

Sales in Novo's international operations last year rose 2 percent in Danish kroner, with sales in the China region climbing 6 percent, the company said last month.

To contact the reporter on this story: James Paton in London at jpaton4@bloomberg.net.

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net.