Novo Nordisk A/S (ADR)(NYSE:NVO) Warns Against A Looming Diabetes Crisis

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The chief executive officer of Novo Nordisk A/S (ADR)(NYSE:NVO), Lars Fruergaard Jorgensen, has warned that increasing cases of diabetes globally could overwhelm health systems and leave them unable to afford life-prolonging innovative drugs. Consequently Jorgensen has called for initiatives which will curb the rise of the disease. This has the potential of reducing demand for one of the signature products of Novo Nordisk, insulin. Currently Novo Nordisk is the leading maker of insulin in the world.

According to Jorgensen unless the current trend is checked, approximately 736 million people will have contracted diabetes by the year 2045. With obesity being the number one cause of diabetes, Jorgensen, urged measures to be put in place in order to avoid an epidemic.

“If we do not bend the curve the whole system will just be even more stressed and the ability to afford innovation is smaller,” said Jorgensen.

Urban problem

Per a report prepared a coalition of cities across the world the annual health expenditure related to diabetes will increase to over $1 trillion by the year 2045. Currently the figure is $775 billion and this would be a rise of close to 40%. About two-thirds of patients suffering from diabetes live in urban areas.

In the United States Novo Nordisk is coming under significant pricing pressures and is consequently predicting that the average prices once rebates have been deducted for its insulin products will be lower in 2018 than this year.

Sales growth

Two months ago Jorgensen said it was important for the pharmaceutical firm to remain innovative since this was the area that was contributing to growth in revenues. In the firm’s most recent quarterly report, overall sales increased by 4% and this was partly attributed to innovative medicines for conditions such as diabetes.

According to Jorgensen there were still more opportunities waiting to be exploited in the treatment and care of diabetes’ patients. Currently only around 6% of the people with the condition are receiving effective treatment which can assist them avoid late-stage complications that are life-threatening.

On Thursday shares of Novo Nordisk fell by 2.53% to close the day at $48.86.

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