Welcome to the Novo Nordisk session at the 2024 J.P. Morgan Healthcare Conference. I'm Richard Vosser, European Pharma analyst with J.P. Morgan, and it's my great pleasure to welcome the CEO of Novo Lars Fruergaard Jørgensen to the conference for the first time. So we're gonna do this session slightly differently, and it's gonna be more of a chat between us. But ahead of that, I'm gonna hand over to Lars for a few introductory remarks. Lars, welcome to the conference.
Thank you Richard and thank you to J.P. Morgan for hosting all of us. Right now is a truly exciting moment in Novo Nordisk. In 2023, we celebrated our 100 anniversary, and we did that by growing 30+% . There's still a bit of numbers to be counted, so we are truly excited about the momentum we have, obviously fueled by our GLP-1 business. We have worked on obesity for more than 25 years. Most of those years, most of the world felt that that was probably not a meaningful thing to do, and now finally, the market is opening up, and we're really excited about what we can bring there. As we'll get into, we're just getting going.
So from a growth strategy point of view, I'm truly excited about the coming years also.
Maybe we start there. I mean, it's just the start, but there's been maybe some false starts as well, 'cause the demand's actually outstripped supply. So I think one of the big questions on people's minds is where are we with supply, and how should we think about supply as we go forward into 2024?
Yeah, it's a good place to start, obviously. And if you look at our growth in 2023, Q3 year to date, we grew Ozempic by 50%. We grew Wegovy by close to 500%, obviously from a low base. And Ozempic is the best-selling diabetes product in the world today, so the fact that we grow that by 50% talks a bit to the magnitude of the capacity expansions we are doing. And I'm very comfortable looking into 2024 and specifically for Wegovy in the US, that we can add a significant additional volumes also in 2024. So it's a situation where we gradually scale up manufacturing. We have, you know, lines coming in, so there's not like a one triggering event.
Unlocking this is a continued journey of building capacity for the years to come, but a significant additional capacity for 2024, for sure.
And if we think longer term in supply, I mean you're planning for the longer term. We've seen big CapEx announcements, but can you envisage a point in time where, you know, your competitors can supply significant swathes of the US market, but also in Europe? Is that something that's possible? Can you get reimbursement? How do you see that picture in the longer term?
Yeah, it's interesting because for us, it's the first time that we have products where there's a very significant, say pull nature from the markets. So typically when you had to scale up, you would have to invest to, you know, quite aggressively in sales and distribution to drive the business. That's different now. We today serve 40 million patients globally. We're probably the, say, the volume leader in terms of injectable therapy in diabetes and obesity. We are adding today, on a yearly basis, around 4 million additional patients. So it took 100 years to get to 40 million patients, and now we're adding 4 million patients a year.
So when you talk about the addressable market, and the kind of cadence we're in now, that actually stacks up to quite a number of patients we'll be able to cater for.
You know, when we think about supply and, let's say, you know, in a couple of years' time, supply is solved. I don't know whether that's right or not, but bear with me. You know, the next big question will be: how do you- how do we pay for that, as a system? That, you know, obesity category is projected to be quite large, and it's a new category. So, you know, how, how... Maybe, you know, we'll, we'll get to that, but picture on reimbursement now and then longer term, how does that change?
Yeah, it's a picture that's a bit different across the world. We launched first in the US, and we saw a very, very strong urge from patients to seek treatment. We saw a very, very strong willingness to prescribe among physicians, and we actually also saw all the payers being willing to adopt Wegovy at the price point that was already in the market. So a significant better efficacy for the same price point as we had for Saxenda. In Europe, it's different. It's actually largely out of pay, so again, a strong willingness to pay for the products. And that was the starting point, and then since then, we have seen more and more clinical evidence building to the whole story about the value of treating obesity.
It's still early days and I think most have probably heard about the SELECT data, but the fact that we are now at a turning point of establishing obesity as a disease. For me, it's a bit the same as the UKPDS event many years back, that actually unlocked the whole Type 2 diabetes market by actually proving that it's actually worthwhile doing intensive therapy for people living with Type 2 diabetes. And now, I think the same is happening for obesity, that for long it's been seen as not a real disease.
It's a matter of will and getting your act together, and now it's actually been acknowledged that, okay it's actually quite different from different people, how you, you know, store fat and that there is a significant health consequence of doing that and preventing some of those comorbidities. I believe, and I've all along communicated that, I think it's going to be the medical intervention with the best, say, health technology assessment in terms of what it saves, of course, in the healthcare system. We all know that healthcare systems have been designed for acute care, but today it's actually chronic care that takes up 80% of all healthcare costs. I think obesity plays a key role in actually lowering some of those expenses for the healthcare systems.
And you touched on SELECT. I mean, what's been the reaction to SELECT from the payers, the initial reaction? Are they seeing these benefits? Are they happy with the long-term benefits versus the short-term cost?
Yeah, it's, it's still early days. We can have, say, a medical discussion with the, with the payers. We cannot yet promote it, but it's, it's clear that all payers are looking at aging populations, you know, growing number of people living with obesity. And, and this, when you model it out, is going to be a really significant cost strain on their budgets. So if you, if you start modeling out, addressing the high BMI comorbidity population first, getting a relative quick saving there, that can actually fund a wider adaptation of it. And I think the release of the SELECT data was a real game changer for us, both among payers, but also among physicians, clinicians, actually, now developing a more, say, weight-centric approach to dealing with a number of diseases.
Maybe drilling on that, you know, the physicians. Have you seen a, you know, widespread positive reaction across different physician types? I mean, cardiologists are, you know, notoriously... Well, notorious may be a little wrong word, but, you know, they are relatively slow to adopt treatments. We've seen that with many drug categories.
I think the reaction we got at AHA this year was a quite strong reaction, I think it's fair to say. And cardiologists are not known to applaud data in an opening session, so there was a very favorable reception of that. And I typically tell my own team that we have to bear in mind that whenever we are dealing with semaglutide, things tend to be different. So I think it's really important not to be biased too much about what typically happens, because I think in semaglutide, we have a molecule that say redefines trends.
I think now it's upon us to drive that, and make sure that across a number of, say, disease areas and medical professionals, that the importance of having a weight-centric approach to dealing with some of these, you know, comorbidities is really important.
And the price is different for Wegovy in the US, ex-US, different price points. But, you know, it's relatively high in the US at the moment, maybe even on a net basis. How do you see that developing as the supply improves?
Yeah. So as you mentioned, it's important to work based on the net price, and we all know that sometimes the story is hijacked a bit by the list price, and you know, in this country, there are significant rebates. And also, as you launch, you launch at the lowest rebate, so the net highest net price, and then you give in a bit year-over-year to make you know the supply chain work. Where it's typically different in, say, in Europe, you launch at the price you will be having for some time. So when you look at the technology assessment, the cost of the US healthcare system is also significantly different.
So when you do the math and look at what is the value of treating patients, I think we end up in an equally favorable technology assessment in the US as we do elsewhere. The market uptake is obviously different. The US has a very fast adoption of innovation. It's a bit slower in other geographies. So you can say in that sense, we're bringing the value first to the US healthcare system, and I think that's quite meaningful.
And how, you know, we've seen huge excitement across the category, both, you know, from the financial community, but also, you know, even on TikTok and all sorts of places, the Oscars. But, you know, how do you see actual demand developing? You know, do we have a bolus of excitement here, which is then gonna come down? How do you see the picture?
Yeah. So you can say there's probably a quick first social media excitement. But what moves scripts is actually physicians understanding the science and the products. So I think we are in a more steady phase now, where it's actually our focus on educating the medical community in understanding the science, the mechanisms, and what is it that the products are doing. So I see a very steady, robust demand that's, I think, moving a bit out of the hype, which I think is positive. Because it was not easy for us to actually control that or even be involved in it.
We are all the time focused on making sure that physicians understand the products, and they can work with the patients to make sure that they make the decision that's right for the individual patients.
Different geographies, same sort of rate of demand right now?
Yeah. We have, we have seen basically in the markets where we launch, say, unconstrained, a similar type of very steep uptick to a degree where we now are launching in markets in a controlled manner, because we want to get to enough markets and actually cater for the patients who are in the biggest need. So now we're testing out new tactics of doing that. And we have launched last year in the UK and Germany in controlled launches, where we have kind of set what's the volume we bring to the market. We have made arrangement with healthcare systems to make sure that the most vulnerable patients, who are typically dealt with by the healthcare system, they actually get treatment, and then there's an out-of-pocket opportunity.
That equity-based model, I think, is important, because we have to face that in today's Western society, some of those living and struggling with obesity also are living in less favorable socioeconomic settings. And I think we have failed as an industry, as a company, if we have not made sure that we also get to them, and they are the ones who end up also putting a burden on the healthcare system. So I actually see there's keen interest from payers also in single-payer countries in Europe, to actually figure out how can we get to those patients? And then in parallel, there's a large out-of-pocket opportunity, and also a willingness to pay.
So our take is that there'll be few single healthcare systems in Europe who would cater for all patients. But if we help them cater for those that are the most vulnerable, there's a very attractive out-of-pocket opportunity next to that.
In the U.S., do you see the use in the most, you know, severe obese patients, or is there some use in... I mean, there's some off-label use of Ozempic, even, maybe with people with lower BMIs. But where, where's the use today?
Yeah, we actually see that, when we collect data on, say, average BMI comorbidities, we actually see that it's very well aligned with label, so we're well into the, say, 30 range of BMI and many patients having one or more comorbidities. So, I think there's a lot of social media, and, you know, you mentioned Oscars, that takes a lot of attention. But the data we have actually talks to that it's the right, say, target group of patients that's on treatment. And I think that's important, because that's where the value lies for the healthcare systems. And I think we have the biggest impact on society.
One of the key questions, I suppose, from investors is also how long are people gonna stay on these drugs? We've seen, you know, your first generation product was a very short stay time, akin to the weight loss-
Mm.
Duration. What are you seeing at the moment with Wegovy, and, you know, how do you think the clinical data that you've generated is going to play into this?
Yeah. No, it's a great topic, and I guess it's one many are trying to get their head around in terms of modeling what's what is this going to be? And as you allude to, for Saxenda, we saw a relatively short stay time. I believe, and it's too early really to tell, because we haven't had patients on average on treatment for that long. But I believe, again, here's example of CagriSema being different, because if you have lost say 15% to 20% of your body weight, and more than a third of the patients in the clinical trial lost more than 20%, that's most likely the first time you have experienced that say defining moment of actually having lost that much weight.
Many have succeeded in losing, say, 5%, just to regain it. So if you haven't had that experience of, you know, sorry, improved health prospects, redefined your life, your social activity from that, I think you are highly motivated to stay on treatment. We know from all medical interventions, you know, stay time is not, like, 100%, so it will not be that for us, either. But I think we'll see a significantly higher stay time than what we have seen so far on obesity treatment.
And if you talk to a few of the patients who have been on treatment, and I've met some of those who were in our Phase 3 program, and then had to leave that before the product was launched, and how, you know, that reintroduces the cravings and the life you didn't appreciate, I think will create a very strong incentive for being on treatment, if you at all have an opportunity to stay on treatment.
Makes sense. Wegovy's got a proven CV benefit from the SELECT trial, but in terms of actual average weight loss, it may be is 5% to 6% below Zepbound from your competitor, Lilly. You know, how do you see the launch of Zepbound impacting the rollout of, or demand for Wegovy?
Yeah. So, a few proxies, we know from the GLP-1 space, that when you have, you know, efficacious products, and, and you launch new efficacious products, it actually fuels the growth of the category. Inferior products will drop out. I actually think we have a high efficacious product, and as I mentioned, more than a third of patients lost more than 20%, so, so there are a lot of patients who do really, really well. So we are only scratching the surface of the obesity market. The biggest challenge we have is not competition, it's actually awareness of obesity as a, as a chronic disease, the need for medical intervention, the value it has on, on your health, system.
So, I welcome competition in actually driving and unlocking that market, and then it's a healthy, competitive situation. And we have also a pipeline with interesting assets coming in, where we believe we can again lift the bar in terms of our body's attractive weight loss. And there are so many patients to go for that, most likely short term it'll be availability of products that drives you know top line growth more than competition.
There's been, you know, Zepbound and Wegovy are injectable products. There's, you know, a developing discussion about oral versus injectable. Where do you stand on that? Where do you see oral products coming in, and how do you think they'll affect the demand for injectable?
No, it's a great, great question, and, I'm known in the company for not being a big favor of market research. And, I'm often told that if you do market research and you ask patients: Would you prefer a tablet or injectable? Most will say a tablet. And here we are, that there's actually a very, very strong, say, willingness to take a weekly injection. And if you ask many of these patients who have been on weekly, injections with, with GLP-1, they find it to be a, a really, really convenient treatment regime. Only have to dealing with it once a day. But of course, there are, there are different, segments, different, preferences. So I think there is space, also for, for all treatment.
We are pursuing it ourselves based on, say, a large molecule approach and using the SNAC technology to make oral formulations. I think it's important when you look at some of the small molecule approaches, that you really look at what's the safety profile, how small is the small molecule? Because it's fair to say that today we, I believe, are establishing a very safe profile of the injectable treatments, and I think there will be very low regulatory appetite for introducing oral treatment that comes with some safety issues. Then it's also fair to say that, when you look at our oral, it has a relatively low bioavailability, so it takes quite some API.
So we have to, we have to kind of balance how do we, as you mentioned, we are investing a lot in API, so we have recently announced an API expansion facility. We announced one a couple of years back. We just finished one in the US, so we are, you know, manifold ramping up our API capacity to create the optionality to go all or injectable based on how we see the market. And when you look at some of the small molecule attempts, I think it's important to also look into how scalable are they, because for a real small molecule approach to work, it has to be safe and scalable.
And, you know, we've seen good data with your oral approach. It's obviously on the market under Rybelsus in diabetes, but there's a higher dose.
Mm.
What's the barrier? Is it that API, or is it the formulation? And, you know, how long can we, will it be until we can see that on the market?
It is about the API, and I mentioned we have made the decisions to expand that significantly. So we will, in the future, have API, and then it will be a trade-off between say competitive nature, number of patients we can get to. So we have a R&D strategy of kind of going all in on the different say options and build optionality, and you can also see that in our pipeline semaglutide, CagriSema, amycretin, and we also have a broad and deep early pipeline that we've not disclosed yet. So we're teasing out all the different options.
And I think this is such a huge addressable market, that there'll be space for different types of products, different administrations and probably also different efficacy levels.
When we think about side effects, we're all aware of the GI side effects, but there have been some news reports and some investigations on other side effects. Maybe first question, how do you feel around the side effects? What do you... What's, what's the latest?
Yeah, so it's a key commitment of ours to make sure that the medicines we make are safe. So we studied this really carefully, and we take it very, very seriously. I'm very encouraged by the data we have. We have had GLP-1s in diabetes on the market for 15 years, 8 years for obesity. So we have millions of patient years there. We have tens of thousands in clinical trials and, recently, the SELECT study. We have also noticed a number of, you know, academic institutions doing research of the data. So when I look across the body of evidence, I'm very comfortable about the safety profile.
Yeah, I think we have a situation where we are in such large populations that you get kind of the background population variance in the patients you treat. So it's important to keep studying it, but there's nothing that causes me to be worried as we speak.
Maybe we can switch gears and think about diabetes, which is where this all came from, in the first place. There's been a change in the guidelines on diabetes to. You mentioned weight becoming more centric. That's maybe in cardiology, we heard, this year, but last year as well, the guidelines changed. So that's, I think, driven a bit of a step change in the market. How do you see that diabetes market developing for the incretin class?
Yeah. So, so I think clearly, we have seen that, that is moving from just HbA1c alone to also, addressing the comorbidities, cardiovascular being a key. And, on that, on that note, I'm very encouraged by, by semaglutide being the only molecule consistently showed, say, 20 or in the to the 20 range % cardiovascular risk reduction. Others, other GLP-1s are in, I think, in the low teens, if at all, showing a benefit. So when we developed semaglutide, there was a number of GLP-1 analogs developed, and we tested them out for pharmaceutical benefit and, and picked this one. So I'm very encouraged about, the added value we can bring in, in diabetes, and I think this is, becoming a required to play part of, of treating diabetes.
We all know that a key risk is to develop cardiovascular disease, and it's one of the biggest, you know, causes of death. It is a real value, and it is a real benefit for patients.
And with that benefit, I mean, there are the SGLT2s that had a cardiovascular benefit, but only the GLP-1s that really lose weight significantly.
Mm.
You know, what penetration do you think you can get, the market get to in terms of GLP-1s in diabetes?
I believe it can become quite significant. If we look at it today, in the US, we are in, say, mid-teens, from a, say, a volume perspective. Outside of the US., it's still low single digits % share of the volumes, highest in Europe, and then we are now penetrating China and other markets. So I believe it can move significantly higher than that. When you get into volumes like that, you have to look at how do you scale? In the US, there's a wide usage of, say, single-shot devices. That makes it harder to scale. So I think when we have to go into significant populations, you also have to look at how are you actually making the dosing.
But it doesn't change the fact that I believe with the benefits of this class of products, and particularly semaglutide, I see a very, very large volume opportunity, and this moving into, say, background treatments like we know it from metformin today, which is a great product, but it's not the most efficacious compared to what we're bringing with GLP-1s.
Is that going to reusable pens, back to reusable pens, or is it-
Yeah. We were the company who kind of invented the device. We moved the market to disposable devices, and I think increasingly that will become a challenge from an environmental point of view, and also a scalability point of view when you get into, you know, large millions of patients. And I mentioned that we're adding 4 million patients a year, and obviously, there's a big difference whether that's a reusable device or it's a single-shot device. So I think both from a scaling, but also from a basic environmental point of view, I think there will be a day where a patient, as a consumer, would not fancy throwing out a device after having used it once. And I think that actually plays into scaling also to many more patients.
We touched on, obviously, growing the obesity market. How do you see that affecting the size of the diabetes market? You know, we've seen in Type 2 diabetes, insulin users is now declining in terms of volume terms, presumably GLP-1 related. How do you see the effect on Type 2 diabetes?
There is an underlying strong growth in the Type 2 diabetes market. So whenever there's a forecast being made, it's almost adding 100 million patients. So there's a very, very strong underlying trend leading to Type 2 diabetes. And if we one day succeed in actually bending that curve by treating obesity, I would be really, really happy because I think that's the strongest contribution we can have to society in actually preventing a serious chronic disease like Type 2 diabetes. And in doing that, we have had a good business in helping people lose weight. And it's a big addressable market that those who live with Type 2 diabetes.
So the purpose of Novo Nordisk is to drive change, to defeat serious chronic diseases and, actually, looking at obesity treatment as a way to prevent Type 2 diabetes, kidney disease, cardiovascular disease, I think, is the greatest proposition you can, you can pursue.
You alluded to ex-US, the penetration is even lower.
Yeah.
So is that a bigger growth opportunity, if anything?
It is. When you look at, say, the insulin market, that's significantly larger outside of US than it is in US So, you know, everything else equal, you can say the volume opportunity in diabetes is way bigger outside of the US And I think obesity is probably more prevalent in the US than it is elsewhere, but the trend is going towards the same. So as I mentioned before, typically in the US, you have the first approval of innovation, and you have the fastest and earliest uptake. So, typically we start here... but there is a significant opportunity in moving into what we call international operations. And we have a leading footprint in international operations.
We have, you know, we had a stronger position there before we break through in the U.S. So the reason why we are the volume leader today in, say, injectable therapy, is largely because of that, international operations, and obviously, that creates a huge opportunity for us as we ramp up capacity to serve those markets, at a lower price point, but a very, very large, say, volume opportunity compared to the U.S.
Maybe competition. Mounjaro, so you said about Mounjaro, Mounjaro for diabetes. How do you see that? We've not seen an effect on Ozempic growth yet, but do you, you know, they're relaunching. How do you see that?
So at least again, if you look at the history of the market, whenever a new efficacious GLP-1 has been launched, it further fueled the market growth. So we've seen that over the last, say, couple of generational products from Novo Nordisk and Eli Lilly. And still we're only in the mid-teens in terms of Type 2 patients being on a GLP-1 in the U.S. So I think that will continue, that physicians like to have choice. There are different, you know, responses from different people. And even when there's a new effective product being launched, that further fuels the category, and both contenders can continue growing. At least that's what history has informed us, and I think that will go on into the future.
And again, we have pipeline coming where we believe we can, you know, stay competitive in that race.
If we think about healthcare reform and IRA, you know, there's a reasonably long path in life, and we'll get to innovation beyond Wegovy in a second.
Mm-hmm.
How do you see that affecting the portfolio?
Yeah, you can say short term, we are—we're baking in the impact from the inflation penalty, the co-pay cap for diabetes. I think the coverage cap is neutral. And then, of course, we are now experiencing what does it mean to negotiate insulin price based on our aspart products. We are not fully in alignment with the IRA and what it entails and some of the basic say logic around it, so we are contending that. But again, here we have a significant volume opportunity, so we are far from having served all patients. And that's...
I think that's one of the aspects where type 2 diabetes and obesity is different, and particularly now in obesity, because we have very long, say, launch paths and penetration of markets, and you have many other products where the uptake is relatively fast, and then you plateau and you decline. So even after an IRA impact, there'll be volume growth opportunity, which can somehow compensate for the impact. And then, of course, we have innovation coming on top of it. So I see a sustained, say, long-term growth opportunity, despite of this.
Next generation innovation, so we've seen a bit of that with CagriSema. You know, how do you see the visible portfolio in terms of CagriSema for the next generation?
Yeah, so we have, as I mentioned, we've been working at this for 25 years, and we have looked across, you know, the incretins, the amylin, and we have made a bet on what we believe has the best properties. And are quite excited about CagriSema, where you both have the energy, you know, reduced energy intake from a GLP-1, and then the accelerated energy expenditure from the amylin, and combining that. And now we're conducting our Phase III studies, so hugely exciting. We have amycretin as a single molecule approach to that, both being pursued as an oral, and we're also testing out as a Sub-Q, start of Phase 1, on that.
Then I mentioned we have a number of early stuff that we have not disclosed, where we're basically looking at teasing out benefits across the whole spectrum of different, say, incretins, and also working with some formulation opportunities to, yeah, help scaling, et cetera.
When we think about beyond obesity, beyond diabetes, I mean you've sketched out a long runway-
Mm
... of growth here and next-generation products also extending that potentially. But how do you plan for beyond this or beyond... or when the growth is slower? What steps are you taking?
Yeah, so, we have a history of being really disciplined and, and focused on a few therapeutic areas and, and mastering, a set of technologies we believe we can master better than, you know, most. It's diabetes, obesity, cardiovascular disease, and it's rare blood diseases. So we, we go in and, and build, strong portfolios here. And you can say cardiovascular and the cardiometabolic space is an obvious place for us to invest. And, you have seen that we are now increasingly using business development, M&A, to build a presence there.
From a position of strength, by moving early, we actually believe we can add a lot of value to our shareholders by taking assets in relatively early and then use our core capability, both in development but also in you know, optimizing molecules, manufacturing, et cetera, and then the global reach we have. So I feel quite excited about our ability to sustain a leadership role in diabetes and obesity, you know, keep investing in those options, and then in parallel, building a quite interesting and exciting CVD portfolio. And also in rare diseases, we are moving beyond, say hemophilia into sickle cell disease, and there are a number of options there.
So a combination of a sustained volume opportunity that was actually, I think, exists also after loss of exclusivity, and then building innovation in the known areas and entering new, new areas that are, you know, near adjacencies to do what we do, I think is the model we're pursuing to pursue long-term growth also.
Excellent. Lars, it's been a great discussion. Thanks very much.
Thank you.
Thanks everyone for listening.
Yeah. Thank you. Thank you.