By Amy Guthrie
MEXICO CITY--Danish drug maker Novo Nordisk A/S is setting out
to redraw the geographical map for diabetes treatments.
Historically the company--which commands roughly half the world
market for insulin, and a quarter for overall diabetes-care
medicines--has focused its efforts on Europe and Asia, leaving much
of the Americas to Indianapolis-based Eli Lilly & Co. However,
Novo Nordisk Chief Executive Lars Rebien Sorensen feels that
strategy has left the company underrepresented in two major markets
where Type 2 diabetes is rampant: the U.S. and Mexico.
Mr. Sorensen aims to correct that imbalance.
"For us, the United States is interesting because Lilly used to
dominate the industry," the 59-year-old executive said in an
interview recently in Mexico City, pegging his company's share of
the U.S. insulin market at 30%-plus versus just 20% a decade
ago.
"My ambition is that we should have 50% in the U.S."
Since 2008, Novo Nordisk's insulin sales in the U.S. have more
than doubled to $7 billion from $3 billion.
The executive is relying on Novo Nordisk's "strong portfolio of
products" to make further inroads in the U.S., complemented by a
global public awareness campaign in large cities where Type 2
diabetes rates tend to be higher.
The global city project is part of Novo Nordisk's efforts to
stay ahead of the pack in diabetes treatments. The company's annual
sales grew 7% last year versus 2012 to 83.6 billion Danish kroner
($14.6 billion).
There are 382 million people living with diabetes in the world,
and that figure is expected to rise to 592 million by 2035,
according to the Brussels-based International Diabetes
Federation.
Around 10% of adults over the age of 20 in North America and the
Caribbean--37 million people--have diabetes, according to
federation data.
"There is a reason why we are one of the fastest-growing
pharmaceutical companies--that is because diabetes is 80% of our
business and because the diabetes problem is escalating like an
epidemic," Mr. Sorensen said. "We will be one of the largest
pharmaceutical companies in the world as a result of the
problem."
The company hopes to enlist cities such as New York and Chicago
in the U.S., or Shanghai and Tianjin in China, to take part in the
initiative. The program aims to help public officials establish
common risk factors for developing diabetes, as well as pinpoint
approaches for treating or preventing the disease.
The first city to sign onto the campaign was Mexico City, where
local government officials estimate that one in five residents has
Type 2 diabetes, although not all of them have been diagnosed.
"This is a snowball that keeps growing," said the city's health
minister, Armando Ahued Ortega. "For me it's catastrophic."
Novo Nordisk has sponsored three events in Mexico City during
the past year as Mexican public officials grapple with some of the
highest rates of obesity and diabetes in the world. Mr. Sorensen
hopes this interaction will lead to higher product sales in Mexico.
Sedentary lifestyles, hurried schedules and poor eating habits have
made for a deadly combination in this megacity.
"There is a moment in the evolution of a nation or a city where
the officials are becoming aware of the fact that they have a lot
of problems, and where they're seeking help to solve the problems.
It's at that particular early stage of nation-building that we have
a chance as a company to come in and assist the health authorities
as it relates to diabetes. This gives us, hopefully, longer-term, a
good reputation," Mr. Sorensen said.
Programs like the cities initiative aren't expected to yield
immediate, tangible results for Novo Nordisk. "We know we're not
going to make any money on this. If there's going to be increasing
diagnosis in Mexico, most likely they will use--at least in some
areas--generic products. But that's fine. Eventually with economic
growth they'll upgrade their products like we upgrade our phones to
IPhones or whatever. And then they'll start buying our more
advanced products and we'll start to make money long-term," he
said.
Novo Nodisk's marketing efforts could be treading a thin ethical
line, consumer advocates say.
"It's a bit two-faced. On the one hand, they say they care about
the people, but the bottom line is they want to sell their
product," said Hubert Linders, coordinator for health projects in
Latin America and the Caribbean at Consumers International.
The diabetes scourge certainly needs more attention, consumer
advocates agree. But they worry about a company like Novo Nordisk
helping government officials draft public health policy, saying
there's a risk of patients being pushed toward costly
medicines.
Since Type-2 diabetes is a progressive disease, patients must
continually upgrade their treatments. Eventually many diabetics end
up on insulin, which can get expensive. That makes for a solid
business for the treatment makers, but paints a dire picture for
patients and public health systems.
Mexico City is offering free health checkups in metro stations,
while trying to get restaurants to offer patrons complimentary
filtered water with meals, to discourage consumption of soda and
other sweet drinks. The city also promotes bicycling and has been
opening outdoor gyms in public parks.
At the federal level, this year Mexico enacted a tax of one
Mexican peso (eight U.S. cents) per liter of sugary beverages like
soda, as well as an 8% levy on high-calorie packaged foods like
potato chips, in an effort to curb consumption.
Mr. Sorensen said the food industry would be "well advised" to
actively engage in the diabetes discussion. "We have to realize
that food is part of the problem," he said, calling for the
development of more responsible food products, advertising and
labeling.
The Danish drug maker says its business in Mexico has been
growing at a double-digit clip since it entered the country a
decade ago. Still, whereas the company averages a 45% market share
for insulin in Latin America, that share is significantly lower in
Mexico. Company officials declined to reveal market share for
Mexico.
Like in the U.S., the health systems in numerous developing
countries, including Mexico, are a hybrid of public and private
services. That is an attractive blend for a company like Novo
Nordisk, which offers a portfolio of products ranging from the
cheap and generic, to the cutting edge and expensive.
The public health system in Mexico opts for generics, for
instance, whereas many wealthy Mexicans or their private insurance
plans are able to foot the bill for more advanced drugs.
In Europe, Mr. Sorensen says that the uniform public health
system is often reluctant to shell out money for more expensive
treatments that it can't afford to offer to every patient. That
sometimes leads to drug rationing or late introduction of new
drugs.
This scenario played out with Tresiba, Novo Nordisk's latest
insulin product, which has only been introduced in a handful of
European countries. Tresiba has been available in Mexico within the
private-sector health system for more than a year.
Tresiba was approved for use in Europe in 2013. However, last
year the U.S. Food and Drug Administration denied immediate
approval of the drug, pending further study of its cardiovascular
impact.
"Because of obesity we see people in their 30s and 40s get Type
2 diabetes, which means that they need to live with this
disease--if they don't die from it--for 30 or 40 years," Mr.
Sorensen said. "That's making it very costly."
Write to Amy Guthrie at amy.guthrie@wsj.com
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