Hi, afternoon, everybody. My name is Wilmar Kapadia. I'm the European spec pharma biotech analyst at Bernstein. It's my great pleasure to introduce the Novo Executive Management team. And with that, Lars, I'll hand over to you.
Thank you, Wimal. Thank you, Christian, for hosting us today, and great to see you all. We are very pleased with our performance in 2018, both in terms of our financial performance, key launch, the clinical pipeline progressing, but also some key changes we have done in the company in terms of setting us stronger up for the future. I'll not go into a lot of details here. I'll just set the scene, and then I'll ask my colleagues to go through the presentations, and I'll go through the conclusions.
When we talk about the future, they are forward looking statements, so we have to be aware that the future might look not look exactly like we preach today. So please take these forward looking statements in mind. We'll do a very short presentation and then we'll allow plenty of time for having discussions with all of you. So, Camille will start by talking to our sales performance. So, Camilla, will you take a look, please?
Thanks a lot, Lars. Yes. So with 5% growth in 2018, you see here that a big part of the growth was driven by IO to a large extent by insulin, whereas in the U. S, 3% growth to a large extent driven by GLP-one. And when we look at the details of the international operations, all of the 5 regions contributed to growth except for Japan and Korea.
The majority of the growth coming from in terms of growth rates coming from EMEA, so Africa, Asia, Middle East and Oceania. In China, also an 8% growth, and in region LatAm, a 29% growth. Underlying growth rate is slightly lower than this due to tenders. When we look at with Teripieras, the growth was coming from, you see over here that we have a total growth of 5%, as I mentioned before. In the therapy areas, insulin contributed 1% in terms of growth rates, quite a nice growth of 5% in international operations, driven by high volume growth, driven by also slight or moderate increase in market share.
And then, of course, in the U. S, we also see increase in market share. We see a slight increase in growth. And then we have the price pressure that when we order that up, we are looking at a growth rate of minus 1%. We do gain market share in the total insulin segment across the world.
And when we look at our total diabetes market share, we also do gain slight increase in our total diabetes market share as a combination outperformance in the insulin segment and in the GLP-one segment. So GLP-one growth was 18%, 14% growth in international operations, 19% growth in North America. We have, of course, launched Ozempic in the beginning of 2018. We now see that our market share in the GLP-one segment is stabilizing on a monthly basis, and we see a strong and very good uptake of Ozempic leading to that the NBRx market share is now has increased to almost 25% and now is bigger than the NBRx share for Victoza. Our overall NBRx share is also increasing as a total of this.
When we look at our obesity, we see a growth of 60%. It's coming both from international operations and from the U. S. So we see a strong growth also outside the U. S, especially in Latin America, in the Middle East, but also in Korea.
And obesity, we expect, of course, to continue market share gains. We see that Saxenda now has 45% value market share, and it has around 4.5% volume market share. So still potential in this segment, but in reality here in the future, we are more focused on growing the market and our actual share. Then in biopharm, we see a minus 1% growth. The growth in the biopharm area is driven primarily by Nuvo8 and by norditropin.
So together, those two compounds account for approximately 14% of the total share growth of Novo Nordisk, whereas NovoSeven, due to the market share loss in terms of after the launch of HEMLIBRA, has declined somewhat. So altogether, that gets us to minus 1% in biopharm. So that's the total of the distribution of the regional growth and the therapeutic growth. And now Matt will elaborate a little bit more on our pipeline.
Thank you, Camilla, and I'll do so by actually showing you 2 slides, 1 on some of the milestones that we've come through during 2018 and one on what are the expectations for 2019. I think it comes as no surprise that the PIONEER program execution and completion was clearly one of the highlights during 2018. We are basically almost ready for regulatory submission of the new drug application to the FDA. And we also expect, by the way, as you'll hear later, that Europe and Japan will follow suit over the next couple of quarters. We have initiated a Phase II program for the first once weekly insulin, both as a standalone agent to assess safety and efficacy of against Glargine U100, but also for the fixed ratio combination, Lycema, which explores semaglutide in combination as a once weekly sulfide, one might argue, and that's in Phase 1.
OB GYs, we've entered into a new research collaboration targeting energy expenditure increases with a Copenhagen University spin out called Embark Biotech and Biopharma Rise. Actually, quite a lot has happened during the course of, in particular, the later parts of 2018, in that we have now completed the Phase 2 program for concizumab, the anti tissue factor pathway, inhibitory humanized monoclonal antibody for both hem AAV and inhibitor segments in hemophilia. And basically on top of that, we are awaiting the regulatory approval of NATP in its intravenous version, whereas we have had to discontinue the subcutaneous counterpart driven by antidrug antibodies related to the route of administration explored. Finally, within other serious chronic diseases, we have completed a license agreement with the Dutch company, Staten Biotechnology, enabling an anti APOC3 antibody development, sweeping antibody, as we call it, for hyperphylactic dysrhythmia and thereby addressing a significant part of the residual risk associated with atherosclerotic cardiovascular disease. Looking then into 2019, a lot is going to happen.
Starting out with Tresiba, we are awaiting the Trujeo head on comparator study in a very big trial that is going to report during the course of Q2. Ozempic, I think you will expect to see us leverage the fact that PIONEER 6, in our view, corroborates the cardioprotectical effect observed in SUSTAIN6 for the semaglutide molecule, meaning that we will seek a label update for Ozempic, including cardiovascular protection. ANGR21 is awaiting Phase 2 completion in recent onset Type 1 diabetes immunometabolic intervention. Like 287, we will actually complete the Phase 2 program that started very recently during the course of Q4 this year. And then for oral semaglutide, we're actually going through both the submission and driven by the PRV, the priority review voucher, also hopefully the completion of the NDA review during the end of Q3 this year, and we're submitting in Europe and Japan during the 2nd and third quarters.
We are initiating an exciting Phase 2 program for human amylin analog 1, 3, BAM-eight thirty three based upon encouraging Phase 1b data with nice weight reductions in that study. And then we have some early stage obesity projects that are also reporting results during the course of the year, and I did mention that when we move into biopharm, N8GP is awaiting first the U. S. Regulatory decision, hopefully approval very soon, and EU in the quarter thereafter and then Japan towards the end of the year. Concizumab, I mentioned that we are taking a pan segment approach towards Phase 3 initiation of that project again towards the end of the year.
And somapacitan, two things are happening. We are kick starting the pivotal trials for growth hormone deficiency in the pediatric segment and submitting the BLA for the adult growth hormone deficiency indication during the course of Q3 this year in the 2 major markets and in Japan in the last quarter. With that, over to Carsten for the financials.
So you've seen the financial results in our company announcements, so I'll just cover the headlines in this somewhat finance side slide. So 5% sales growth in local currencies, turning into a flat reported sales growth, most notably driven by the US dollar. When we then look at our gross margin there, then you see a flat gross market in reported terms. Actually, in local currencies, our gross margin is up some 20 basis points.
That you should see in the light of
the fact that as you know, we've had lower prices in the U. S. In 2018 compared to 2017, so the price pressure in U. S. Of course negatively impacted our gross margin.
We have been able to compensate that through a combination of product mix, so selling predominantly more G2 ones and also driving productivity gains in manufacturing, so those two elements have offset the negative price impact from the US on our gross margin. R and D up 8% in local currencies. Do bear in mind that we had the impact from the project review voucher, which we had $525,000,000 so that needs to be taken into account in R and D costs, admin impacted by restructuring, so it's not like we are losing it on our administrative costs, it's adjusted for restructuring costs and our administrative costs of some 2%. Financial items, a gain of 367,000,000 reflects hedging gains from the US dollar, not fully offsetting the net loss we report in operating profit, where we go from 3% local currency to negative 4% reported decline in operating profit. The reason why we don't see a full offset is, 1, hedging cost between Danish kroner and U.
S. Dollars, so the classic interest rate differential and secondly, losses on side currencies, so emerging market currencies that we're not hedging. Of course, we don't get the gains then on financial items. Income taxes down in terms of effective tax rate 18.9. This is, I would say, artificially low or it's impacted by a couple of non recurring items, So adjust for those, then we're around the 21% mark.
Hence, net profit up 1 percent and earnings per share with the share buyback up 4 percentage points. Then outlook for 'nineteen, so we see a sales growth of between 2% 5% in local currencies. And do bear in mind, this growth rate basically takes into account that
we have a hit of some
DKK 2,000,000,000 from the donor so legislation that we announced earlier in 2018. So despite that, we are guiding 2% to 5 percent local currency sales growth. Now the U. S. Dollar has flipped around, so now we have a positive currency impact mainly due to the U.
S. Dollar, which is up around 4 percentage points compared to the average 'eighteen against Danish kroner. Operating profit growth, 2, 6 percentage points, and again with a positive currency impact. Then the positive currency impact is, of course, offset by hedging losses going into 'nineteen with SEK 2,400,000,000 effective tax rate is is pretty much unchanged when we adjust for one offs in 'eighteen, so between 'twenty and 'twenty one. CapEx, we go from €9,500,000,000 in 2018 to €9,000,000,000 in 2019, and from there, we should see a decline.
The, I would say, somewhat inflated CapEx level is driven by us building an API facility for diabetes API in Clayton, North Carolina. So that impacts 'seventeen, 'eighteen, 'nineteen, and from there we should see CapEx come down. Depreciation, what noting, normally not spending too much time on that, but being impacted by IFRS 16, so then amortization of leasing that hits this line, so therefore a step change compared to prior years. And then we've had an adjustment of our long term financial targets. I would say it's more of a technical nature as a reflection again of IFRS 16, the lease accounting standard, as well as the elevated CapEx level linked to the U.
S. JP investments. So we have adjusted our OPAD NOA ratio from 125% to 80% and then our cash to earnings target from 90% to 85%. And do bear in mind that our operating profit growth target of 5% is unchanged. And all these 3 long term financial targets, you recall, we restated or revised with the base in 'fifteen.
So we said in the fall of 'sixteen that operating profit growth would be an average based on 'fifteen. And then normally, you would expect us to restate that or change that when we have met the target or when we can see we cannot meet the target. So historically, that has been on a 3 to 5 year horizon, just to give a feel for the duration of the targets. So with that, over to conclusions and Lars.
Thank you, Karsten. So just to wrap it up, very strong position in the diabetes care space, strong growth in the insurance operations in the insurance space, compensation stating for the price pressure in insulin in the U. S, very strong position and exposure to the growing GLP-one category. You look at obesity, a leading position in a market that's responding very well to medical intervention, growing by 60%. We have managed with more focus on our biopharm activities to actually compensate for the CEBAR pressure on NovoSeven.
We have been able to compensate that largely by selling from our broad portfolio both in Australia and growth hormone. And that meant that we ended up in the high range high end of the range we guided at the beginning of 2018 and despite a DKK 2,000,000,000 impact from the covered share hold, we guide 2% to 5% for this year on sales and proceeds and profits. Now I would like to just make one comment on block pricing in the U. S. Here towards the end.
And there's been a lot of talk about block pricing, not the least insulin pricing. So just kind of a few facts when you read and hear about companies like Novo Nordisk taking insulin pricing up. We believe we have a very affordable approach to insulin in the U. S. So just a few facts, we supply free of charge insulin for 50,000 Americans each and every day.
So, Americans who are below 300% of the poverty limit in the U. S, they get free insulin from Novo Nordisk. That's 50,000 Americans each and every day. You can buy very affordable human insulin via partnerships in the U. S, the biggest one being Walmart.
So, 500,000 Americans also eat and every day buy human insulin in a vial that brings down daily treatment cost to $1 to $2 depending on the volume you consume. So, there's a lot of talk about the development in this price and you know we also increased our rebates, and for the last few years, we've actually seen a decline in the price more noise put in our pockets. And in 2018, we on ARRIS gave 6% to 8% in rebates. So that amounts to DKK113 billion that is given in rebates to PBMs and then shared with insurance companies. So, while we understand that there are some complexities in the U.
S. Healthcare structure, that means that patients are less in situation where increasingly they're being charged the list price or have to pay co pays as a fraction of the list price. We do take the volatility very seriously. And again, 500,000 by insulin, bringing daily streaming costs down to a few dollars and 50,000 get insulin free of charge. So that was our presentation and we'll now start the Q and A.
And please use the microphone to make sure your question is clearly stated because this session is being webcasted. And please also limit yourselves to 2 questions. So, we might as well as
you better start. Great, thank you very much. So, I guess consensus missed Saxenda growth again, and Kelly, the product is performing very, very strongly. So, how should we think about Saxenda growth in 2019 given that you're going to continue to roll out the product across the globe? So should we see an acceleration in the Saxenda growth in 2019 versus 2018?
And then my second question, positive for Mads, is around the Trulicity CV label. So, I guess I just wanted to get your thoughts on what impact potentially for Novo and Ozempic if Trulicity was to get a broad CV claim, both in the primary and secondary populations and what that would mean for Ozempic? And then just following on from that, in terms of your confidence of getting a CV claim using SUSTAIN 6 and PIONEER 6? Thank you. Thank you.
Camilla, first on September growth.
Yes. So I can start on Saxenda. We have now launched Saxenda in 37 countries, and we are about to launch it further now this year in more countries. So we are rolling it out across the globe. And Xtenda is the first product that we will launch in our B2B franchise, and with that, we are preparing for developing our support to the market in terms of education, in terms of potential for funding in the future.
So we do expect that the obesity franchise over time will continue to grow, and you have now seen steady growth rates when you look at quarter over quarter without guiding on individual products for the future, we do expect that obesity will be a strong growth driver of ours for the future.
Thank you, Camilla. Mads on CV for competition and ourselves? Yes, I think the only thing that we all of us I guess know from Italy's communication on the RUINED study is that they overall saw a specifically significant reduction in measurement, and my guesstimate is that we're all heading for the same type of label, so to speak, unless you were able to, for instance, in the primary prevention stand alone cohort, shows statistical significance, it is, in my view, unlikely that you get a broader claim than others having the industry being ourselves predominantly Victoza. And then as it comes to Ozempic, our view is that the PIONEASE 6 data with a 51% significant TB mortality reduction and an overall 21%, albeit non significant MACE reduction, does really corroborate the SUSTAIN 6 data and when you add them together, so to speak, all three components of the strict MACE endpoint drive the overall outcomes, and that in my book indicates that the very high level of MACE reduction, 24% aggregated, is something that we are really expecting and hoping to get into the labels after submission, as I mentioned, of a supplemental NDA in that regard. So I think Ozempic will be competitive both as it goes for the metabolic effects and benefits as compared to other geosbuons, but also on the heating side.
Thank you. Michael?
It's Michael Leuchten from UBS. Question on Ozempic. Obviously, the product did phenomenally well this year already. When we go back to the beginning of the year, your guidance was relatively cautious. Could you just talk through how the product has been able to do so well given the coverage was well received in at the beginning of the year?
What's changed during the year to allow to perform so well outside maybe the clinical evidence that we know of? And then just going back to the pooling of SUSTAIN6 and PIONEER 6, how exactly does the conversation happen with the FDA? So, they propose to you that pooling might be right. You've given a fairly broad window on when you may or may not see a decision from the FDA. Like what does it mean you talk to the FDA?
Is there a timeline? Is there a deadline? Or is it sort of whenever they may or may not look at it?
If I start by some comments on Ozempic. There is a significant number of diabetics who are not in good control looking for better treatments. And we hear the evidence that it doesn't take many weeks on Ozempic to really see a meaningful change in both glucose level and the weight profile is also something that's very attractive for patients. So we took a stance from the beginning of the year that we wanted to build the access in a good way. So we didn't rush it in any ways, and we had Victoza to focus on until the individual districts could actually switch as Ozempic access came in.
So the year unfolded more or less as we had planned it to, and yes, of course, we guided cautiously in the beginning of the year as we landed the excess contracts. And some of the contracts that were landed in Q1 came live from Q2, so that was a gradual buildup. And of course, that gives an acceleration throughout the year, and we're very pleased with how we exited the year in terms of both establishing the product in a way where we're not just switching from existing GLP-1s, but actually going out and talking to the effectiveness of using GLP-1 based therapy because as a leader, you really need to expand the market more than gaining share from others. So we believe that GLP-one is a very, very attractive way to treat diabetes and we see basically across the board that all products are more or less growing in this category and thereby fueling the growth, which I think is very attractive for the long term. But for clear, the feedback we get from physicians and patients is that Ozempic is indeed a very efficacious product and a product that makes patients very satisfied in using it.
Yes, and then as I think you all know, we were engaged in a meeting, a discussion with the FDA on overall outcome studies for the entire semaglutide portfolio during which the FDA clearly stated, as you are aware, that we did not need to do outcome studies both injectable for oral each and every time in a pivotal way, rather they saw the SUSTAIN 6 data as highly encouraging and quite strong, albeit the study was so small that they would like to see some kind of a confirmatory study, whether that be undertaken with an injectable version or an oral they didn't mind at all because they will look at the exposure in the patient population and if that is similar, which is, by the way, it is for PIONEER 6 and SUSTAIN 6, and the inclusion criteria in the population were the same, they would look at that and look, of course, across the data and see are they in totality robust and you can say strict enough to warrant a CV label upgrade. And that means that if and when we then get the upgrade for Ozempic, and that is a 10 month supplemental NDA regulatory process, of course, we're discussing, then 10 months later, you would have a cardiovascular label claim with a sustained 6 data being the pivotal one as you also see it for Lida.
But in this case, it would be supported by the agency having analyzed across trials and looking at consistency and so on and so forth. Might diversify the way when we look into the cardiovascular opportunities for oral semaglutide, but there the only weakness is that the PIONEER six data actually only accrued slightly more than half the amount of events in the Sustain6. So then the pivotal part of what would form a claim is, you can say, smaller and maybe less robust than it was in the case of Ozempic and Sustain 6. Thank you, Mads. Richard?
Hi, thanks. Richard Vossett from JPMorgan. You mentioned needing to do or someone needing to do a standalone trial to get a primary prevention label. Just thinking about Sol and then maybe high dose sema in obesity, would it be the high dose sema in obesity that you might try to do primary prevention or is that not on the table for any of your drugs? And then secondly, just thinking about the triagonist, just with all the developments from Lilly, etcetera, what do you need to see from the triagonist in data later this year, early next maybe to move forward on that?
Just give us some idea of what you're looking for. Thanks.
Yes. So Richard, to take the last one first, the triple agonist, which is a GIP Glucagon agonist, triple agonist from the Richard Dimarkey lab in Indianapolis, There, we would be seeking something that should preferably exceed that which we're expecting to see for the high dose Ozempic, because there's not much rationale in developing something that is a Ozempic high dose or to separate size look alike. It would have to do, in my view, even better. That's also why it agonizes on low respiratory receptors. So the data we'll be getting hopefully updating for a decision on that one.
But do bear in mind, when we come to weight loss, we have numerous shots on growth, including the amylin, including Phase 2 and so on. So we are looking at all of that in totality. All the trials are coming to an end during the course of this year, which really enables a portfolio based discussion of the future of the obesity pipeline and for that matter, to some extent, also the diabetes pipeline. When you look into primary prevention, to us, Select is critically important because Select is the one that on the one man hand is a landmark in terms of obesity being defined as a chronic serious disease where you can actually improve on outcomes with pharmacological intervention. So that is one of the 2 main elements of Zellett.
The other is defining semaglutide as a molecule that has cardioprotective capabilities beyond those seen in type 2 diabetes. And there we actually see that Select, even though it is a high risk and established CBD cohort, that it is more important for us to expand CEMA in CBD beyond diabetes and into non diabetes such as obesity than to go for a direct primary prevention cohort because it is our feeling that when physicians get comfortable with the product and they use it, they will assess not by doing ankle to brachial indices and all kinds of things during a GP investigation, but by assessing is a patient a cardiovascular risk and then they will make their treatment choices based upon that kind of infection. So it's more important for us and we have had the discussion to move beyond diabetes with ZEMA also CBD protection wise than it is to go into a classic primary prevention cohort.
Jo Walton, Credit Suisse. A couple please surrounding oral sema. The first one on the gross margin. So you said in the past that the gross margin was about the same as your industry as your group average. I assume that isn't the case on day 1 when you're selling nothing and you've got a plant up and running.
So how many is it a couple of years, 3 years before it gets to that margin? And the reason that I'm asking is, you're moving from being an injectable company where we perceive new products come through and perhaps come through to profitability quite quickly because you are focusing them on endocrinologists and specialists. And you're moving to an oral company where we see massively competitive markets. We can see much bigger groups of prescribers and where I think we would typically think it takes, say, 3 years to get to profitability. So the first question is how we should be thinking about the gross margin?
And then secondly, assuming you get your approval Q3, you've got some of your access ready by the beginning of 2020, how should we be thinking about this move of you from being an injectable company where you can sustain your profit? Should we think this is such a fabulous opportunity, you're going to really invest heavily and we could even see a dip in profits 1 year because you're going for that extra fast penetration to maximize your life cycle. If you could just talk about how we can think about injectables versus oral profit gross margin and how you see that marketing commitment going forward?
So Carsten, without getting into guidance for 2020 and getting too close to pricing strategies, what can you share some overall perspective on
Yes. So just recapping what we've been out saying around all semi gross market, and you're correct, Joe. So we've been out saying that if we assume ADL-one like pricing, then we can see oral sema getting to group average gross margins of 84 percent. So that's the statement. It is not intended to say anything about the specific pricing choice, but just to give a feel for that despite the bioavailability, then it can still be a very profitable product.
Timing wise, I would say from we are talking in the medium term, so I would say the 3 to 5 year horizon before we get to that level. But in terms of the group impact, then of course, the impact in the earlier years is less just given the relative size of the product to the total portfolio.
And then if I can just add, I'm not a financial guy, but the good thing is that this is a big facility and it's one that can do quite a lot of things and of course, you only take kind of the hit on the first product. So in R and D, we would like to see also even more products to come over. And just for general comment, it's not like we're turning into an oral company. We still have for many years the majority of our patients in non injectable treatment. So I think it's correct that it's first time for us, well, we have no one on, but broadly speaking, it's first time for us to enter the oral category.
So significant amount of patients there, not in good control. So I think it's an opportunity for us to expand and add growth more than you would say or we're looking at completely changing the profile of the company. No question in the back.
This is Kerry Holford from Exane. Just following up on Joe's question for Sema. Perhaps if I can ask, how do you think about the investment that you're going to need to put in from a sales perspective? So do you envision needing to promote that product to a different set of physicians, perhaps more primary care versus specialists? Perhaps you can talk about that relative to the GLP-1s you sell today.
And then secondly, on CapEx, we're still in this relatively elevated period of Clayton, but you mentioned that that should tail off after 2019. What is suitable run rate, a normal run rate going forward?
Thanks. Thank you. Camilla, first on target audience and capacity to
cover that and then Karsten on CapEx. Yes. So, when
you talk about the target audience and capacity to cover that, it's really going to be region specific or market specific approach like we've done also for our GLP-one launches and insulin. This means that in some countries, we already cover the majority of the relevant positions and the potential. And in other countries, we are further away from that. So in each market, we will look to see how we optimize our coverage for the relevant population of physicians to market this. And of course, we are looking at also benchmarking ourselves towards what it takes to compete in this segment.
Yes. And on CapEx, it's not like that single truth and one silver bullet of a number what is a baseline CapEx, but you should expect us to after when we're done with the cable facility, then we don't have any huge CapEx investments planned because we have the billing services we need for our current pipeline. We have the diabetes API manufacturing in place and obesity. So it's a lot of rebuilds and upgrades and some capacity on the assembly side. So without being anything or just to give you some flavor, then we're talking perhaps in the 5,000,000,000, 6 1,000,000,000 range, but with some insulos around that and specifically, just to give a view for the time.
Good.
Peter Welford from Jefferies. Just on oral semaglutide, first of all, again, just with regards to the filing, should we understand that when you put in the filing in March to the FDA, will it include the sustained SIT and BIONEER 6 data? I mean presumably it will have to include all those data. So I guess therefore given they're going to be reviewing the data at that time, why shouldn't we assume that there's going to be some sort of data? I guess what's going to change between the filing you're going to put in, in March to FDA versus a filing you could then put in post the SMA for Ozempic, given as far as I understand, all the clinical data is now in house already?
Secondly then just on oral sema and sort of pricing, but not pricing specifically, so the guide around Ishmael. Is there anything or are you already going with payers to put to them that this isn't a GLP-one, so to speak, in the sense that the risk here, I guess, is if they regard this as a GLP-one. Therefore, when you then discuss pricing and obviously set rebates, etcetera, you end up being put in the same group, which could be both a positive and a negative. Is there any way in which you're trying to distinguish this differently or are you trying to push repay as this is just a better GLP-one drug?
So, Mads, first on the filing. Yes, so what we will do is of course submit NDA and sNDAs that need is hopefully to accommodate both for oral semaglutide as pertains to glucose regulating type 2 diabetes and realizing the potential and nice upside of having a CV indication already at the time of launch. And preferably have kind of the ability of the regulatory division and the medical reviewers to look at data from SUSTAIN6 supporting PIONEER 6 and vice versa more or less at the same time so that they don't have to do a multitude of revenues of what essentially constitutes the same cardiovascular database. So I guess you are right that you are not going to see one submission and then a long time data, other things coming in. I think we will update you more specifically in the near time to come on the specifics of the timing, etcetera, and the label.
And in terms of the dialogue with the payers, what we can do now is that we can have a dialogue between, say, medical representatives in our company and the payers. So we talk about the clinical profile of the product. So we're not yet into, say, pricing discussions or contract discussions. And I think when you look across the ore category, I think there are different mechanisms and they compete not based on what kind of molecule it is, but what it can does what it does in terms of glucose lowering effect. And that's of course our approach that there's a huge market for patients, physicians wanting to treat TAVR2 diabetes based on tablets shying away from injections.
And there are different, say, treatment cascades today, different level of efficacy, and there's just a new kid going to join that class that has a higher efficacy. So I don't think it's a discussion about what is the mechanism, but it's about what is the clinical relevance and what is the preference for physicians and patients deciding how to treat the diabetes.
Narish Johan from Intrinsic Health. Could you talk about oral sema access and how
we should think about that? Ozempic obviously has had a very quick uptake or very quick access in the U. S. To see if
it took a lot longer.
Should we are there are
you expecting step edits?
How should we think about what we how quickly you open up that market and how would it differ, if
at all, to Ozempic? It's still early for us to talk to that because we are not yet in the price negotiations with PBMs. Clearly, from day 1, there is a block in place, so we cannot start selling until you get contracts in place. That's similar to what we saw with the case for Ozempic. We feel that there's general excitement about the profile of the product.
And that's more or less what we can say now. We have not yet announced what our list price will be. So it's early to guide and speculate around how that
Thanks again. Wilmar Cabotia again, Berti. So, I guess just one on pricing, I know you can never give specifics, but on basal insulin pricing. So, on my math, Levamir was down realized price per unit about 21% in 2018. So, again, you can't give specifics, should we see an acceleration, a similar number or a deceleration in price decline for 2019?
And then second question is on priority review vouchers for Selma in obesity. So, in the past, you talked about potentially using the voucher for sema in obesity or sema and we now know you use it for oral sema. Is it will Novo buy another voucher for Osema and Osema? Good. So Camilla, on pricing?
Without commenting on specific products, what you what we would expect is that there is going to be continued price pressure also in the insulin segment, in the Basel segment. And over time, as more competitors might come into the market, it is likely that, that will continue.
If I can add just one point. So you mentioned it correctly correct. So for 'eighteen, there is one big difference between 'eighteen and 'nineteen, which is we saw a formula change between 'seventeen and 'eighteen in Part D. So whereas from 'eighteen to 2019, there are pretty much no formulary changes in the marketplace. And formulary changes basically have the tendency to inflate volumes and prices in our operations.
So to do your math, you need to look at both volume and prices.
On priority review vouchers and whether we will acquire one for the U. P. Syndication, we cannot comment on that. It's clear that we will launch Semo BDC relative close to patent exploration for the reactified molecule. So time means something, but we also have a case where efficacy will be significantly higher, assuming Phase 3 development turns out to be what we saw in Brazil.
So I think there will be a significant differentiation there. So you can have different approaches to that, But we cannot give guidance on whether we would buy a Progyny voucher or not. We don't comment on that.
It's Michael Outy from UBS. Just a question for Camilla. On Victoza, are you surprised how well it continues to do now that you've put the entire marketing effort behind Ozempic? Is that market more sticky than you thought it was going to be? Or is it trending in line with expectations?
I think basically, Victoza and Ozempic is trending according to our expectations. We knew that it was going to take a while to get the access in place, as we talked about before. And we basically only switched completely to focus on Ozempic by the mid year. So you could say in the last 6 months, we have done almost between 95% 100% focus on Ozempic, And we now see that Ozempic has a higher share, new to brand share growth than a new to brand share than Victoza, and that is in line with our expectations, and we do expect that this trend will continue over time. We are very focused on new patients with Ozempic because, of course, Rifusa is also a good product and patients will control them.
Rifusa will stay there. But over time, we will be able to start many more new patients on Ozempic. And that, of course, contributes also to the growth in general in the GLP-one segment. And Michael, you may be able to add that, of course, those who are not switched from Victoza to Ozempic, as you know, they do have
a stay time of 3 to 4 years. So there will be a slow decay one does something special about that, then there will be patients on the part per year.
Sorry, Richard Vossa from JPMorgan. Just going back to the CV claim around oral sema, does it really matter having a CV claim at launch? I mean, SUs don't, DBV boards don't. And the reason I'm asking is, wouldn't that run the risk? Isn't that a trickier thing to get through the FDA?
You've paid for a priority review voucher. What's the point?
So just a general comment, you would say when Victoza got the CV label, that was kind of the first time. So I think we've seen more products showing CV benefits. So we have come from ruling out that there was a risk to diabetes agents directly seeing that a number of agents has a benefit. So treating diabetes is good for CV disease and we already have on label in the U. S.
The underlying data and of course we have the label outside of the U. S. So, for the physician treating a type 2 diabetic, the first priority is to manage glucose levels and Recymbic does that very well. So that's the key driver. And you can see in the current market dynamics that it works really well.
So I think it's nice to have the CV label and of course, we don't have to go for it, but it is the diabetes efficacy that is making the brand right now. And then we have seen update in the treatment guidelines, so of course increasingly physicians will also be aware of what are the choice that also gives the CV benefit, but that is a benefit that's not fully established in the market yet. So short term, I think we are not worried about having CV or not. So that's the importance of having it. I don't know I think you already answered the question in terms of the considerations around CV, regulatory, I don't know if you have No, the only thing is for Ozempic, I actually do think, Richard, it's nice to get soon for the sheer reason that Eli Lilly would like to put in the injection based segment.
And so for that one, we also realized that the treatment guidelines we're actually positioned just after mitosis because it is perceived by the medical community that the METAL data were more robust and hence we are in 2nd line in that regard. That would change in Preciplyk even when Preciplyk gets that cut otherwise.
Hi, it's Ben Yeo from RBC Global Asset Management. There's been another talk on the reorganization of the U. S. Organization over the last couple of years. And I was just wondering how far along you are in that journey, whether there are any signs of improvement and what we should expect and how essentially how that journey has gone.
And secondly, although this perhaps is not the most friendly of audiences for it, but I haven't heard much talk about the triple bottom line of late and I was just wondering whether any of that thinking has evolved in terms of culture and purpose and where the organization has gone, especially after a year or 2 of where there has been sort of reorganizations and a moment in the sort of Novo organization, which has probably never had to deal before in its history? Thank you.
Thanks for bringing that up. I think that's fundamentally for any company. And just starting out on the U. S. Organization, we went from a classical functional structure where you had sales, marketing, access, medical reporting all to the head of the U.
S. Organization. And you could say that the top management team in the U. S. Became the common denominator and people work a bit in silo.
In a time where you want centralized management, all territories are the same, that probably makes sense or is at least a logical choice. But as the U. S. Market has evolved, it has become more fragmented, so we have different necessary, you have different access in different territories, you have territories where you have single clinicians, you have all our territories where it's integrated units, etcetera. So, we have reorganized in 5 large areas where there is a general manager type individual running each, having full responsibility for both sales, marketing and local access.
So these individuals are empowered to run their territories much more locally. And with the flow of tactics we had in 2018, first promoting Victoza, then Ozempic, we have been able to localize more how we did that and switching on promotion of Ozempic whenever it made sense locally. So in my view, this has strengthened the leadership. It has empowered the frontline to do a better job than we have seen in the past. So I'm very pleased with that.
And that change is in place. We got in place late 2017, so it has actually been in place from the get go of 'eighteen where we launched the SIMPLE. Then through the triple bottom line and the purpose, and thank you for bringing it up. You're right, it's not something we often talk about in a meeting like this. But of course, that is a fundamental driver of the company that you can actually activate a purpose that the organization unites around.
And in my view, young smart people nowadays, they are much more purpose driven than, to be honest, I was when I was their age. So it's really, really important that a company can articulate that and in your behavior, you do something that's reinforcing your purpose. So it's been a priority for me at a time where we have been more under pressure than we were in years back that we did some visible things to really show that we are committed to triple bottom line. Of course, the first one is financials. We talked a lot about that.
I think we have stabilized the company and see a growth, a good growth track. On the environmental dimension, we have, together with our annual accounts, launched a new environmental strategy, Circular for 0, where we are aiming to become a circular company. We will already by 2020 have all our manufacturing powered by renewable energy. There are not a lot of companies who have that. We are setting an ambition to extend that through the whole operations of Novo Nordisk.
So by 2,030, all of operations, all manufacturing, all sales activities, company cars, flight would have to be CO2 neutral. That's a very bold ambition like it was when we defined the current ambition of actually powering manufacturing by CO2 neutral sources. Not all technologies are ready to do that, but by doing it, we also create a demand for that. And I told my employees, my next company car will be an electrical car. And then I looked out on all the other managers, and guess what, they're also going to buy electrical cars.
So we need to make some choice there, and that is very engaging for employees. And lastly on the social commitment, I started by talking about affordability in the U. S. And actually making the claim that I believe all Americans can afford Novo Nordisk Insulin, maybe not the latest innovation, but there should be nobody who should ration or go without insulin. We have also made partnerships with the International Corps to make sure that people who live in refugee camps, they also get insulin.
And we actually also give money to create capacity to treat diabetes in rescue cancer. And lastly, we made a big partnership with the UN backed by the WHO, which is not often you see private public partnerships like that, where we actually create an initiative to treat non communicable diseases like diabetes, where we create a marketplace and infrastructure to make sure that progress can get into for instance, countries in Africa, where today it might be we have products in, but they end up getting significant markups before they get to patients by leveraging the capacity of new and ups, the project are in the U. S, we can get products all the way in a controlled manner without a lot of corruption around these products. So thanks for bringing it up. It's something we're strongly committed to, and I can tell you there are a lot of people in New Orleans who work in the company because of that.
Camilla
talks about benchmarking your infrastructure in places where you were going to be moving more into orals and perhaps you weren't as involved in the with the docs that prescribe the orals at the moment. Could you share with us some sort of high level views of where you think you need to actually put additional investment in and where you're already correctly sorted? And a second question, just if we are to see the rebate removed, Trump's latest one, How disruptive would that be? Is it I know it's something that you think would ultimately be a good thing, but do you see an easy way to go from here to there or should we see some disruption on route? If I start out on that,
today, we have a situation where patients, not in all cases, are benefiting from the rebates provided and that problem is increasing in size as more and more patients are in, say, lower quality insurance. That's not a sustainable structure because there's never been an intention that anyone should any individual should buy at list price. The biggest customers do not buy at list price, they get a rebate. So as a company, I think we cannot survive the long term if the marketplace is not solving society's problem. So I think it has to change.
Many things have been tried out. So I actually welcome that we look into changing how we actually get that rebate in the hands of the patients. So we get at the point of sales, we get the rebate all the way out. It's not easy to do because today, a lot of contracts that are locked up. The $113,000,000,000 we put into the system is locked up in contracts.
So it takes changes to that. There was a lot of IT systems. Here in the UK, you have one IT system, the NHS rules that on behalf of society. In the U. S, you have for each payer, each insurance scheme, you have IT set up.
So it will take some change. I think increasingly it's being understood in the public domain how the complexity of the system actually creates some issues that needs to be dealt with. I welcome now that Washington is looking not into actually how the system works. Some of my colleagues are being asked to go to Washington to explain. We get some letters with a number of data requests.
I actually will come and get that out because it's not working to our benefit today and Camilla is commented on the development in basic pricing, that's not a sustainable model. So we welcome that we actually do something that's better for patients. If it's better for patients, it also creates a more sustainable environment for us to compete in. But it's not going to change overnight because it's a very complex setup.
And then we'll have to take advantage. So the go to market, just wanted to elaborate on that. So what I said was we're taking a market feed approach that like we've also done for our other compounds. And just to give you an example of that, there would be places where we have a very good coverage of the OAB potential like the U. S, but there would also be regions where we have less of that because we traditionally have focused on injectables, and that would be in places like Japan, where OAD is a very big part of the market, but we have traditionally focused on insulin and injectables here to 1.
And then there'll be many countries sort of in between those two extremes. And based on that, on a market lead approach, we would, of course, be benchmarking our approach to launch Orzena.
Catch us on the way out if you have one final question.
Thank you. It's Carey Olsen again from Exane. So two questions please. You talked about your rebates in the U. S.
Increase to serve your list prices. So can you just talk about net benefit loss pricing in the U. S. In 2018 versus 2017 and your expectations going forward? And then lastly, your appetite for M and A.
So how do you prioritize internal investment versus external opportunities? Are you actively looking for bolt ons? And if so, what's your desired size target?
So on net price, so we increased our average rebates in 2018 from 64 to 68, so plus 4 points there. I cannot get into individual products, but if you just look at one of the products that's been singled out in this insulin pricing discussion, that's NovoLog, so that's a fast acting insulin. It's a very important product for TaeKwon diabetes, so mealtime insulin is very important. So that has also been taken out in the public. So over the past approximately 15 years, the list price has gone up by 400%.
The net price to us has gone up by 28%. So the Kaka, the annual increase to us has been 1.5%. That's a no luck in a while. If you take the same in a device, the CAGR exactly being minus 0.6%. And you know all that for the last few years, insulin net pricing has been going down.
So there is a significant spread between list and net. On M and A, we say M and A, but we also mean, when we say M and A, licensing. And in Mas's area, we did 11 deals to bolt on to our organic pipeline. Sebastian can comment a bit on that. In the biopharm space, we did 2 deals, all those smaller deals in 2018.
Towards the end of the year, we closed the complementary fit to our growth hormone business. So, we keep looking for biopharm and we are clearly guided that it's in the low single $1,000,000,000 but most likely these deals are smaller deals because typically it's asset sitting in Biotech where we can do a better job in helping commercialize that and finalize the development of it. But we still think that we have a basic capability and also capacity in biopharm where we can build on assets to underline that biopharm was flattish in 2018. So we are getting more out of our ongoing assets just by focusing more on it and have strengthened the leadership around it. So, Mads, maybe a few comments on what you have been building on.
Yes, so I always use the terminology. To be honest, most targets that Novo Nordisk has worked on for the last century actually originated in academia, Toronto University, Sweden, Copenhagen University and so on. And so in essence, you can see the fact that we are doing a lot of reeling and dealing and the 11 collaborations that Lars mentioned, some of them were actually done with academia to access new targets, so our molecular engineers can make those translate into the most suitable drugs locations. Others relate to our ability to, for instance, enhance our capabilities by getting something in, either the ability via MIT to make insulin orally available or the ability via acquisition of a small biotech company to make insulin totally glucose sensitive or to make peptides penetrate the blood brain barrier, so we have brain selective agents such as GLP-1s and others for OBM and maybe other diseases, the Oceanix collaboration. So there are plenty of examples, but in reality, you will see that the way we replenish our pipeline due to the higher threshold for innovation going forward is that there will be more new targets and more new mechanisms of action, and that actually calls for a lot of early stage collaborative deals with academia and with biotechnology.
And you're seeing that, and that will continue there. Good. Thank you all for your time. We truly appreciate it, and we on the way out, those who are most aggressive can catch one of us and sneak in one more question. Thank you very much, and have a nice afternoon.