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2023-08-16| M&A

Novo Nordisk Delivers Strong H1 Financial Performance, With Acquisition to Expand Weight Loss Market

by Richard Chau
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On August 10, Novo Nordisk released its financial report for the first half of 2023, reporting a remarkable 32% increase in operating profit to 48.9 billion Danish kroner (approximately US$7.2 billion) compared to the same period last year, with impressive sales growth in key product areas such as diabetes drugs and obesity care. 

The Danish pharmaceutical giant, which celebrates its 100th anniversary this year, also issued a press release on the same day, announcing that it had reached an agreement with Inversago Pharma for the acquisition of the Canadian obesity drug maker. With upfront and milestone payments of up to US$1.075 billion, the transaction is expected to close before the end of the year.

Related article: Novo Nordisk Announces Major Insulin Price Cut by Up to 75%, Following in the Footsteps of Eli Lilly 

Strong Global Sales Performance with Exceptional Growth in North America Operations

Being world-renowned for manufacturing insulin and diabetes medications, Novo Nordisk is also active in the markets for hemophilia treatments, growth hormones, and weight-loss medications. The Danish drugmaker has also seen its revenues rise in recent years, with double-digit percentage increases in both 2021 and 2022, and has emerged as the world’s third-largest pharmaceutical company by market cap (US$411.8 billion), behind only Johnson & Johnson (US$447.4 billion) and Eli Lilly (US$494.9 billion).

According to the company’s latest financial results for the first half of 2023, in addition to a significant increase in operating profit compared to the same period last year, global sales rose by 17% at constant exchange rates (CER). Geographically, sales grew 12% in Greater China and 18% in Europe, the Middle East and Africa (EMEA). Sales in North America Operations even registered an increase of 44% (also at CER).

Sales of Diabetes Medications and Anti-Obesity Drugs Surging

By therapy area, the company’s performance was particularly strong in diabetes and obesity care, with overall sales of DKK 99.0 billion (about US$14.6 billion), up 37% at CER. Sales of glucagon-like peptide-1 receptor agonists (GLP-1 agonists) for diabetes rose by 50%, while sales in obesity care surged by 157% to DKK 18.1 billion (approximately US$2.67 billion).

In addition to the positive financial results, Novo Nordisk also announced two days prior to the release of its H1 financial report that its antidiabetic and anti-obesity drug, Semaglutide (sold under the brand names Ozempic and Wegovy), has achieved favorable results in the Phase 3 SELECT clinical trial. In this trial enrolling more than 17,000 overweight or obese individuals aged 45 years or older, a weekly subcutaneous injection of 2.4 mg of Semaglutide significantly reduced the risk of Major adverse cardiovascular events (MACE) over a 5-year period. Further, the Phase 3 obesity trials OASIS 1 involving once-daily oral Semaglutide has also successfully completed.

Looking ahead to full-year performance in 2023, Novo Nordisk’s sales and operating profit growth at CER are currently expected to be in the range of 27% to 33% and 31% to 37%, respectively.

A Fierce Competition in the Multi-billion Anti-obesity Market

The World Health Organization points out that obesity is a chronic disease. Even if it does not cause immediate physical discomfort, long-term overweight or obesity will still unknowingly impair the functioning of the body’s internal organs. Apart from various complications such as diabetes, heart disease, hypertension, stroke, osteoarthritis, and cancer, obesity may also lead to different kinds of emotional disturbances, jeopardizing the physical and mental health of patients. Besides adjusting diet and exercise habits, patients with more serious conditions (e.g., BMI of 30 or above, or with chronic diseases such as diabetes, hypertension, etc.) may also need to take medication for weight management.

An analysis by Bloomberg Intelligence estimates that the global anti-obesity drug market could reach US$44 billion by 2030, marking an approximately 18-fold jump from that in 2022. Novo Nordisk already has a strong presence in this area, with Semaglutide being one of the few drugs approved by the FDA for both type 2 diabetes and obesity care. 

However, Lilly, Novo Nordisk’s main competitor in the anti-obesity market, is also taking steps to strengthen its pipeline through acquisitions, while seeking FDA approval for its type 2 diabetes drug Tirzepatide for weight loss treatment, which could come as soon as late 2023. The most recent example came last month with the announcement of acquisition of Versanis Bio, a U.S. biotech start-up developing drugs for cardiometabolic disease, whose main product is a monoclonal antibody drug in clinical phase 2 that may have the potential to reduce fat while preserving muscle mass. On August 14, Lilly announced the successful completion of the acquisition. Under the terms of the agreement, Versanis could receive up to US$1.925 billion in cash, inclusive of an upfront payment and subsequent payments upon achievement of certain development and sales milestones.

Novo’s Acquisition of Canadian Company to Sharpen its Competitive Edge 

In response to intense competition in the market, Novo Nordisk announced on the same day as the release of its H1 financial results that it is to acquire Montreal-based pharmaceutical company Inversago Pharma. Currently, Inversago is focusing on the development of drugs targeting the cannabinoid receptor type 1 (CB1) protein, which plays a key role in metabolism and appetite regulation, for the treatment of obesity, diabetes and complications related to metabolic disorders. 

Under the terms of the agreement, the acquisition includes Inversago’s lead development asset, INV-202, an oral CB1 Reverse agonist that preferentially blocks CB1 receptors in peripheral tissues such as adipose tissue, gastrointestinal tract, kidneys, liver, pancreas, muscle and lungs, thereby facilitating weight loss. As for the amount, the total value of the upfront payment and various milestones could be as high as US$1.075 billion, and the transaction is expected to be completed by the end of this year.

Novo Nordisk intends to delve deeper into the potential of INV-202 for the treatment of obesity and its related complications. According to Martin Holst Lange, Executive Vice President for Development, the acquisition of Inversago Pharma will further strengthen the company’s clinical pipeline in the area of obesity and related diseases, thus bringing innovative therapeutic solutions to improve the quality of life for patients suffering from serious chronic diseases.

“We believe this combination will help unlock the full medical potential of our CB1 blockers and may one day expand treatment options for people living with metabolic syndrome, obesity and related complications,” said François Ravenelle, CEO of Inversago Pharma.

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