Majestic Research

Newsobserver.com

Insulin Maker Could Benefit

By Sabine Vollmer
Published: June 29, 2007

Half of the expansion that doubled production capacity at Novo Nordisk’s insulin plant in Clayton now stands empty.

But that open space—about the size of a large grocery store—represents Novo Nordisk’s future, Lars Nobert, the plant’s general manager, said.

As the rising diabetes tide takes a toll on millions of patients, the Danish drug maker—whose plant in Clayton supplies nearly half the insulin used in this country—could be one of the biggest winners.

Every year, more than 1 million new diagnoses continue to swell the ranks of diabetes patients. There were about 14.6 million diabetes patients in 2005, according to the National Diabetes Information Clearinghouse, and patients are getting younger. Most start treatment with pills, but within 10 years, about half must inject insulin to limit the risk of amputations, blindness, heart attack and stroke.

“We see the need for insulin constantly increasing,” Nobert said.

Insulin is gaining ground, though diabetes pills remain the preferred treatment in the United States, with more than half of total sales of diabetes treatments, market research company Verispan found.

Though insulin does a better job of controlling blood sugar, it is more difficult to use. But it is gaining favor amid concerns that the two best-selling diabetes pills raise health risks.

Sales of one pill, GlaxoSmithKline’s Avandia, have dropped 25 percent since the treatment was linked to an increased risk of heart attack about a month ago.

Also, advances in research are improving insulin’s potency, and pre-filled, disposable devices are making it easier to inject the medicine. As a result, some doctors have begun pushing for earlier use of insulin.

The new delivery devices are the main growth driver, not just for Novo Nordisk but for the entire industry, said Eric Staeva-Vieira, a health-care analyst with Majestic Research.

Novo Nordisk’s version, FlexPen, is made and filled at the Clayton plant. Before the company built the $100 million plant expansion, it imported the plastic device.

But Novo Nordisk still has challenges. It needs to do a better job of catching up with Sanofi-Aventis, the market leader in the more profitable products—known as modern insulins—if it wants to take full advantage of rising demand, Staeva-Vieira said.

“It’s a matter of reimbursement, marketing and increasing the sales force,” he said.

To reach more doctors and patients and increase its U.S. market share to 50 percent, Novo Nordisk plans to add 700 sales representatives, broadening its sales force to about 1,900 by the second half of this year.

In the past five years, growing U.S. demand for insulin doubled employment to 400 at the Clayton plant, backed by as much as $7.8 million in promised state and county incentives. Novo Nordisk plans to hire 127 at the Clayton plant as demand increases. Annual salaries start at $52,000.

Making, using insulin

Novo Nordisk employee Shirley Little, 52, started injecting insulin in 1997, about four years after she was diagnosed with Type 2 diabetes. About 90 percent to 95 percent of diabetes patients have Type 2 diabetes, which is linked to obesity, physical inactivity, older age and a family history of the disease, according to the American Diabetes Association.

Both of Little’s parents had diabetes, and four of her five siblings have been diagnosed with the disease. Her husband, Michael, 56, who has no family history of diabetes, was diagnosed five years ago.

Little’s doctor recommended adding insulin to her treatment regiment, because the pills failed to get her blood sugar under control. She remembered getting a month’s worth of samples along with her first prescription. Taking the samples, she noticed that the insulin was a Novo Nordisk brand. “I make that,” she told her doctor. “That’s great.”

Little joined Novo Nordisk in Clayton in 1996 after being a stay-at-home mother. She works in the plant’s quality control laboratory.

She administers insulin with the FlexPen, which basically eliminates refrigeration and allows for easy dosing and discreet injections.

The convenience has a price: The same unit of insulin is about 30 percent more expensive in the FlexPen than when it is drawn with a syringe from a glass vial. As part of Novo Nordisk’s health insurance benefit, Little is reimbursed for her prescription, including her co-payment.

In its current version, FlexPen has been on the market for about five years, but Novo Nordisk is working on improvements, plant manager Nobert said.

Novo Nordisk fills vials and FlexPen cartridges with insulin produced in Denmark and assembles FlexPens in Clayton. Medicines filled at the plant include Levemir, Novo Nordisk’s answer to a Sanofi-Aventis modern insulin, Lantus. Last year, Lantus generated more than $1 billion in U.S. sales, according to Verispan.

The Clayton plant is also in line to make a promising injectable drug that is not an insulin, but has been shown to lower blood sugar, said Per Valstorp, Novo Nordisk’s senior vice president of product supply. The drug, in late-stage testing, is at least two years from coming to market.

Last year, diabetes treatments generated about $9.5 billion in sales, more than three times sales 10 years ago. But death rates and medical-care costs are also up. Diabetes is the sixth-leading cause of death in the United States, according to the National Diabetes Information Clearinghouse. Diabetes accounted for $92 billion in medical costs in 2002, the year for which the latest information is available.

The trends in diabetes are going in the wrong direction, said Dr. Alan Moses, Novo Nordisk’s chief medical officer. “If we’re successful—if we can move therapy into the direction of better blood sugar control—we should see a rise in the demand of insulin.”