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NVO Boosts China Investments to Fend Off Sanofi

http://www.bloomberg.com/news/2011-06-01/novo-will-boost-china-investments-to-fend-off-sanofi-coo-says.html

›By Frances Schwartzkopff - Jun 1, 2011

Novo Nordisk A/S will boost investments in China to preserve its dominance in the world’s largest market after rival Sanofi made a new foray amid an effort by the government to improve health services.

“We don’t fear any competition,” said Kaare Schultz, chief operating officer for Bagsvaerd, Denmark-based Novo, the world’s biggest maker of insulin.

Novo produces two-thirds of the insulin used in China, where the latest study shows one in 10 people have diabetes [#msg-48221898),]. Sanofi said last month it will train 10,500 doctors and experts in diabetes care as part of a Ministry of Health-led program to curtail the disease’s spread.

Novo will respond by boosting its presence as needed across all aspects of the market, from sales people to production to patient care, Schultz said yesterday in a phone interview. It won’t make acquisitions, he said.

“You will see more manufacturing. You will see more education,” he said. “You will see more training of patients. You will see more research locally.”

The Chinese market is growing in importance for drugmakers [duh] as its economic growth supports greater investments in health care while U.S. and European providers look to cut costs. Last month, Novo said it probably won’t be able to raise prices in the U.S. as much as in previous years as health-care providers demand greater rebates from drugmakers.

Chinese sales grew at a faster rate in the first quarter than any other region, Novo reported April 28. Revenue rose 34 percent to 1.38 billion kroner ($267 million) compared with overall sales growth of 15 percent.

Amputations

The Chinese diabetes drug market will climb fourfold by 2015 to more than $2.8 billion from $642 million in 2009, the International Market Analysis Research and Consulting Group said in a September report. More people are moving from rural areas to cities, changing their lifestyles and eating habits and triggering a rise in obesity rates, IMARC said.

Being overweight or obese significantly increases the risk of contracting diabetes, a condition marked by rising levels of sugar in the blood. When untreated it may result in heart and kidney problems and blindness and may require amputations.

Novo’s share of the Chinese market, by value, fell after Paris-based Sanofi introduced its 24-hour insulin Lantus in 2004, according to IMS Health Inc. figures which Novo provided at its capital markets day last month. Novo’s share of synthetic insulin [i.e. insulin analogs] dropped from about 70 percent in 2006 to 53 percent five years later, the figures show.

Market Share

“That is due to the fact that Lantus has been launched at a very high price point,” Schultz said. Looking at the volume of insulin sold, “we have not lost market share, and we are still at a very, very high level.”

A 2009 report by the International Diabetes Federation estimated that 4.2 percent of China’s mainland population had diabetes. Researchers reporting in the New England Journal of Medicine last year pegged the figure at 9.7 percent, and called for additional measures to prevent and treat the disease.

About 8.3 percent of the U.S. population and 6.6 percent of the global population has diabetes, according to estimates by the U.S. Centers for Disease Control and the IDF.

Novo started operating in China about 15 years ago when Novozymes A/S, the listed enzyme maker that then was part of the Novo group, entered the market. In 2002, Novo created a diabetes research center, in 2007 it established a foundation with the Chinese Academy of Sciences, and this year it’s expanding its insulin packaging plant there to become the world’s largest.

Sanofi created a research clinic in 2005 which it expanded three years later, set up a trial-development center and signed a partnership with the Shanghai Institutes for Biological Sciences to develop medicines for diabetes, cancer and neurological diseases.‹