Novo Nordisk A/S (NYSE:NVO) incoming President and CEO Lars Fruergaard Jørgensen is slated to start his leadership roles in the New Year. However, it seems he is raring to go given that he is already aligning on how to restructure the company’s R&D priorities. This comes at a time when the diabetes giant has put a halt on the development of an oral form of insulin and instead choosing to refocus on its pipeline, which has more reliance on in-licensing early stage projects.
While it will also consider external academic collaborators, the Danish pharma aim is to put more emphasis on diabetes and obesity adjacent conditions. They include cardiovascular and chronic kidney disease as well as nonalcoholic steatohepatitis (NASH).
Novo Nordisk is seeking solution to U.S. payer difficulties
Jørgensen’s vision for a new Novo Nordisk will be interesting as the company has been struggling with payer problems in the U.S. which have resulted in worse-than-expected performance for its modern insulin. They have also hit at product pricing. The pharma’s argument is that payers are not supportive of the cost-effectiveness of oral insulin hence the long-standing complexity associated with its development.
However, as Novo Nordisk CSO and EVP Mads Krogsgaard Thomsen outlines, “We will seek to move into adjacent areas, areas that are part of and yet go beyond diabetes. These include NASH-Nonalcoholic Steatohepatitis proved to be kicked off by a Phase II trial with the semaglutide later this year, but also the buildup of the research pipeline.”
Revisit of research strategy prudent
The company’s complete retreat on oral insulin may be surprising but nonetheless Thomsen emphasizes that it is all about having a favorable payer environment, which will facilitate high innovation threshold that will justify new projects. Thus the R&D management and executive teams must go back to the drawing board. Perhaps the adoption of external collaborations, co-creations, alliances, and licenses will give a positive turnaround.
The company expects to submit to the FDA its semaglutide, the once-weekly injectable GLP1, which registered positive data later this quarter.
Novo Nordisk last trading session closed at $35.54, a decline of $0.12 or 0.34%.