Lars Rebien Sørensen - Health Care
Good morning. 1998 was an eventful year for the Health Care area. Before reviewing 1998 - let's take a look at the development over the last five years.
Slide 16 - Health Care Sales 1994 - 1998
As you can see, Health Care has enjoyed quite stable growth over the last five years - coming from a healthy volume/mix growth of 10+%, stable prices overall; however, overall negative impact by the strengthening of the Danish Krone.
Slide 17 - Health Care Sales 1997 - 1998
In 1998, we realised an 8% increase in sales despite a negative exchange rate impact of 3% from 1997 to 1998. Our Diabetes Care business grew 10%, to some extent fueled by the launch of NovoNorm®/Prandin™; adjusted for NovoNorm®/Prandin™ the growth was 8%. However, NovoSeven® also contributed strongly to the sales development.
Slide 18 - Geographical breakdown of Health Care sales
Sales in EU grew with 10%, ROW with 8%, whereas sales in Japan declined 6%. Here we must notice that Japan was impacted by three factors:
- Currency decreased compared to Danish Kroner
- Prices decreased
- and inventories were bought back from Yamanouchi.
Adjusted for these factors sales in Japan developed satisfactory. Finally, sales in the US jumped ahead by 47%, or approximately DKK 420 mill, driven by Prandin™/insulin and currency.
Now turning to the launch of NovoNorm®/Prandin™.
Slide 19 - Prandin™ status in the US - the Schering-Plough collaboration
In the beginning of 1998, Novo Nordisk made an alliance in the US with Schering-Plough for the marketing of Prandin™ and our current insulin products. This was done in order to ensure the best possible coverage of our products in the market place. Many Type 2 diabetics are initially diagnosed and medicated with Oral Antidiabetic Drugs (OAD), like Prandin™, by the general practitioner. Hence, it was necessary to ensure that Prandin™ got coverage with the general practitioners and we entered into a co-promotion agreement with Schering-Plough. The Schering-Plough sales force is mainly covering the general practitioners and managed care providers, whereas our existing US sales force is covering the endocrinologists. Both companies' sales representatives are detailing both Prandin™ and Novo Nordisk insulin products on every visit.
Schering-Plough is paid per visit to doctors in addition to a certain step-up percentage of sales. The agreement is progressive in that higher sales give higher relative sales fee.
Frequent meetings between Novo Nordisk and Schering-Plough are conducted to exchange feed-back from the market place, share the most recent market research and refine the messages based on the feed-back.
In all we have a very positive relationship with Schering-Plough.
Slide 20 - Prandin™ in the US (cont'd...)
More than 100,000 patients have used Prandin™.
Market research shows a high level of awareness and willingness to use Prandin™ among physicians.
We are in the process of publishing a number of new publications on clinical safety and efficacy data to support Prandin™.
To support the medical profession, we are conducting a number of education programmes, such as:
- Faculty led clinical experience teleconferences
- Clinical experience programmes for PCPs & IMs (Primary Care Physicians and Internal Medicine physicians)
- Joslin CME series (on all aspects of Type 2 diabtes)
Now, how has Prandin™ performed.
Slide 21 - Prandin™ launch status in the US, launch comparison vs Amaryl NRx market share
The total sales of Prandin™ in 1998 were DKK 240 mill most of which derived from the US. Only a handful of European countries launched in the fourth quarter of 1998.
In the US, we filed for approval of Prandin™ with the FDA in June 1997 and after an expedited review we received approval in December 1997. When comparing the launch of Prandin™ with Amaryl, which is the last major secretagogue launched in the US market, Prandin™ is performing in line with Amaryl's month-by-month market share of new prescriptions, so-called NRxs, as shown here. However, due to the market growth this represents 35,998 prescriptions compared to Amaryl's 25,612 in month 9 following launch. By the end of 1998, Amaryl held 6.1% of the new prescriptions in the US vs Prandin™'s 1.9%.
We have to acknowledge that penetration of the market is somewhat slower than we had expected. This is explained by a number of factors, most importantly a very limited amount of pre-marketing activities partly due to an unexpected expedited review by the FDA. Training of representatives, awareness building, finalisation of clinical studies etc, all took place at the same time as we launched the product. By the end of 1998 and early 1999, we are getting all these things in place and do expect to see a continued penetration of the market.
All of this make us believe that we have a very good product, a very good partner in Schering-Plough and that we will see a stronger penetration of Prandin™ in the US in 1999.
Slide 22 - NovoNorm® launch STATUS in EU
In Europe we have Prandin™ brandnamed NovoNorm®. We have launched the product during the fourth quarter of 1998 in the UK, Germany, Sweden, Denmark and Ireland. We have since beginning of 1999 launched in Austria and Finland. We will continue roll-out in Europe during 1999. While it is too early to conclude anything, we are getting positive feed-back from the market place and we believe that we can leverage our strong position in the European diabetes community to make a success of the launch.
Now turning to the total diabetes care growth opportunities.
Slide 23 - Diabetes Care - Important drivers of market growth
As evidenced on this slide there are tremendous growth opportunities in the diabetes care market.
The number of people diagnosed with Type 2 diabetes in the world is estimated to increase to 215 million people in 2010 from an estimated 120 million in 1997 - that is an average increase of 4.6% pa and a very sub-stantial underlying patients growth - and hence, eventually volume growth for insulin.
The recent publication of the findings from the largest and longest diabetes study ever undertaken, the UK Prospective Diabetes Study (UKPDS), lasting over 20 years and involving more than 5,000 patients, has documented that aggressive treatment of diabetes with oral products and insulin, will significantly reduce the risk of long-term complications from diabetes. As the results of this landmark study start to show in the practice by doctors treating diabetes patients this will have a positive effect on the amount of oral products and insulin needed.
As the general income level increases in a large number of the emerging markets, so does the willingness and ability to pay for healthcare. Diabetes is a disease area where early diagnosis and treatment of the disease greatly reduce the downstream complications and hence, the cost of healthcare. The benefit to society of paying for treatment up front and ensure patient compliance to treatment is enormous. In the US, it is estimated by the American Diabetes Association that the cost of diabetes care, including indirect costs of treating long-term complications, is up to USD 100 billion - of this, drug treatment constitutes less than 3%. As these facts become more generally accepted and understood the potential in emerging markets for diabetes care providers is significantly increased.
A very important part of aggressive treatment of diabetes lies in ensuring patient compliance to the regimens. Many studies have shown that patient compliance is higher when using pen devices for administration of insulin as opposed to the traditional vials and syringes. The upgrade to these higher priced products gives a positive product mix effect. The switch to newer insulin products like insulin analogues will also have a positive product mix effect. The same is true for Oral Antidiabetic Drugs (OAD) where a switch is seen from older products to newer better products which command a higher price. All of these constitute significant sources of growth in the diabetes care market.
The largest single market with the highest potential for Novo Nordisk remains the US market. Both in terms of market share and the opportunity to upgrade, the market from vials and syringes to pen devices, from a current pen penetration of around 2% represents a huge opportunity.
As new products will come into the market place, eg long-term insulin analogues, and a few years later perhaps pulmonary insulin, these will further fuel the growth opportunities in this segment.
In conclusion for diabetes care, it is quite obvious that Novo Nordisk is very strongly positioned in the market place to reap the benefits of the very substantial growth opportunities.
Turning to Novo Nordisk's franchise in HRT.
Slide 24 - Hormone Replacement Therapy
Two major events characterised our Women's Health Care in 1998: The discontinuation of the levormeloxifene clinical programme and the launch in Europe and the US approval of Activelle™.
As data emerged from our Phase 2 and Phase 3 trials of levormeloxifene it became evident that a number of women in the trials had developed serious side-effects through the use of levormeloxifene. Weighing the benefits-risk profile of the drug with due consideration to patient safety, we decided to terminate the trials of levormeloxifene. We took a provision for this in the financial accounts for the third quarter of 1998 and work is now ongoing to close down the trials in an orderly fashion. While this is a significant set-back for Women's Health Care, we still have a significant, focused European business in the area of HRT.
The launch of Activelle™, our low-dose continuous combined product, in a number of EU countries is an important milestone in our HRT business. The product has a positive side-effect profile, especially the bleeding profile is attractive compared to older products. In November 1998 we received approval by the FDA to market this new product in the US. We had decided to out-license our Women's Health Care products in the US to ensure adequate coverage for these products with the target group. Going forward we will be receiving royalties on sales in the US once a US partner has been identified.
A number of interesting developments evolved in the final of our core businesses, the Growth Disorder business.
As you will recall from a previous slide, sales of growth hormone decreased by 5 % in 1998 vs 1997, mainly due to the impact of the Japanese Yen, the re-purchase of stock with our former distributor and a mandatory price reduction of hormone growth in Japan. However, our market share in volume terms was stable at 12.8%.
In July 1998, we filed an application for a liquid formulation of our growth hormone with the European Authorities. An application for the same product was filed in Japan, our biggest market for growth hormone, in February of 1999. We expect to file in the US later in 1999. This should make Novo Nordisk the first company to market a liquid formulation of growth hormone in EU and Japan. Our liquid growth hormone, termed Norditropin® Simplexx™, in combination with the new NordiPen™ will be the first liquid growth hormone product with a dedicated pen delivery system to be marketed worldwide. The combination of Norditropin® Simplexx™ and NordiPen™ will set a new convenience standard for all growth hormone patients. No mixing of growth hormone is required and an easier injection will lead to better compliance for the patient and hence better efficacy. Further, this system is expected to reduce the product wastage which is inevitable with the current system of mixing.
In total, we continue to be optimistic about the prospects for this business, despite a projected flat market development over the next five years.
Slide 27 - New pen device for Norditropin® Simplexx™
On this slide you see a picture of the newly developed Simplexx™ pen.
The final product area I will touch upon today is our very successful product for treatment of patients with bleeding disorders, NovoSeven®.
The current marketed indication for NovoSeven® is for patients with bleeding disorders who develop inhibitors to blood Factors VIII or IX. The worldwide target audience is estimated at around 3,500 patients. Based on this indication alone and not having launched the product in the US, sales of NovoSeven® continued to advance strongly throughout 1998, leading to an increase over 1997 of 56% amounting to DKK 576 mill.
Contrary to expectations, the US Food and Drug Administration (FDA) did not approve NovoSeven® in 1998 due to continued discussion concerning the underlying production technology. Approval is now expected in the first half of 1999.
Launch in Japan however, is still a few years away.
We have a clinical trial ongoing to expand the indication for NovoSeven® beyond the inhibitor segment.
The liver indication, focusing on the treatment and prevention of bleeding during invasive procedures in patients with coagulopathy due to liver disease. Testing is currently done in Phase 2 clinical studies. We estimate the market potential of this indication at approximately USD 600 mill.
The ASIS (Active Site Inactivated Seven) project is aimed at evaluating the safety and efficacy of this protein in the prevention of thrombosis and restenosis in patients undergoing percutaneous transluminal coronary angioplasties (PTCA). The project is based on a modified version of NovoSeven® that works as an anti-coagulant. Animal studies have been most positive, facilitating the efficacy and safety Phase 2 study in PTCA, now initiated in Europe. One million PTCAs are performed annually.
With the current performance of NovoSeven® based on the inhibitor indication only, the long remaining patent protection, all competitive products being based in plasma products and the clinical programme ongoing for new indications, we have a very interesting existing business with some very attractive potentials.
In conclusion, I will say that we had a strong year in 1998 in the Health Care business, despite the set-back related to levormeloxifene. We have a very strong foothold in diabetes care, a market with huge potentials for growth. We have a number of new products giving us growth possibilities in our other business areas. By addressing the opportunities for growth in emerging markets and by opening the US market - our prospects for delivering a strong return are quite attractive.
To give you some insight into the R&D pipeline of our core business area of diabetes care, I now leave the word to one of my colleagues from Health Care, Mads Krogsgaard Thomsen, who is heading-up our Discovery and Pre-clinical Development function.
