It’s always a bit of a gamble for a company to attempt to claw back into the market it built. But that’s a chance Danish pharmaceuticals major Novo Nordisk is willing to take in India. The company’s India arm, Novo Nordisk India, is taking competitors head on in the diabetes therapy space where it has been the market leader for long. With increasing threat from domestic players such as Biocon and Wockhardt, as well as from international pharma biggie, Sanofi Aventis, Novo India has seen its market share slip to 60% from over 70% four years ago. The company’s answer? Modern long-acting insulin, rather than the more common (and far cheaper) human insulin and its variants.
Novo had launched Tresiba, its modern hormone insulin, a year or so ago in Britain. By October, the drug was available in India at Rs 1,800 a vial; that’s a good 25% higher than what it costs in Europe, and that’s largely the result of high import duty and taxes here. Despite the high price, Novo is hoping that this drug, the product of complex biotechnology, will help it regain its place in the market. The problem is that Sanofi has long offered a modern hormone insulin product, Lantus, which costs almost 50% less than Tresiba.
Lantus was launched in India in 2007, when Novo only had variants of the old-generation human insulin, which costs roughly Rs 145, though it’s sold at around Rs 40 to government hospitals. With Lantus, Sanofi’s per day cost matched the best oral treatment available and was preferred over human insulin due to its once-a-day dose. Lantus is the highest selling drug in its category globally, grossing $7 billion (Rs 42,112 crore) annually, compared with Tresiba, which brings in less than $1 billion.
Novo has a tough battle ahead if it wants to win back its leadership position in the diabetes segment. “In the last few years, Novo’s grip on diabetes has clearly eroded and it will have to convince us harder if it wants prescriptions,” says an endocrinologist at a leading Mumbai hospital, explaining why more and more doctors prefer prescribing non-Novo drugs to fight diabetes. This is a bitter pill for Novo, which has relied on doctors’ backing ever since it entered India in the ’80s in partnership with Ahmedabad-based Sarabhai Chemicals.
Today, those doctors prefer prescribing Lantus, which has an 85% share in the modern insulin market, clocking sales of Rs 150 crore in FY13.
GLOBALLY (AND, OF course in India), diabetes care is highly lucrative for pharma companies. Patients and insurance companies spend over $70 billion every year on diabetes medication, second only to cancer. Africa is the fastest-growing in the world, where the $15 billion, 90-year-old Novo is the leader. It’s also No. 1 in China, which has the most number of diabetics in the world. Novo’s global sales and profits have grown steadily in the last 42 quarters.
Novo is doing fine globally; it is among a handful of MNCs that has the technology to make insulin—human or modern. Manufacturing insulin involves complex synthesis of protein using biotechnology. And patent holders say the protein chains in biotech drugs cannot be replicated exactly and so generic equivalents of biotech drugs, or simply, biosimilars, will never be the same as originals.
Also, the U.S. Foods and Drug Administration doesn’t have an approvals process in place for biosimilars, which has ensured fewer generics competitors for human insulin, though the product went off patent in 2001.
Research agency IMS says that by 2016, China will be the second most valuable diabetes market after the U.S., up from No. 5 in 2007. India will be eighth, up from 15th. But here’s the thing. For Novo, India, with 63 million diabetics, hasn’t shaped up as well as China. Novo began operations in both countries around the late ’80s; last year, its sales in China touched $1.2 billion—over five times India’s.
Equity analyst Balaji Prasad of Barclays in his recent report Bittersweet: Diabetes in India 2020 predicts sales of diabetes medicines to be Rs 22,700 crore by 2020, growing at a CAGR of 20%. Local biggies Biocon and Wockhardt have replicated human insulin and now market their products, thanks to easier local laws.
Biocon even has a version of Lantus which it markets under the name Basalog. Recently, in its internal sales presentations, Novo recognised Biocon as a competitor, after the latter’s market share in human insulin increased to 15%. Coupled with competition and government control, human insulin prices have reduced from Rs 245 a vial to Rs 145. Last year, Novo’s sales grew the slowest in four years after the government tightened human insulin prices.
Then, Novo plays only in 20% of the diabetes market here. Broadly, there are two kinds of medicines for diabetes—injectibles (insulin and its variants) and oral medicines (80% market). Though insulin is generally recommended as a first line of therapy, doctors say most Indians prefer oral medicines, as injections are perceived to be indicators of more serious illnesses. Novo doesn’t have a presence in the oral drugs space.
Melvin D’Souza, managing director, Novo India, is unperturbed at a suggestion that the company could be losing its grip on India. “We have had three big launches in eight years and have a rich pipeline of products we can launch even faster than in other countries.”
However, Novo’s recent launches for treating diabetes—Victoza and Levemir—haven’t yet notched up noticeable sales.
WHEN NOVO ENTERED India, diabetes was not a therapy worth the mention. It did not even figure in the top 50 diseases by value of drugs sold here. Novo evangelised the cause of diabetics. It conducted the nation’s first diabetes survey, held massive detection camps, and roped in an Australian university to train doctors in diabetology.
It also set up a factory in partnership with Ahmedabad-based Torrent to produce insulin vials. By 1992, when it had set up offices in Bangalore, Novo India was the undisputed leader in diabetes management. It is today the fourth-largest therapy with annual sales of Rs 5,200 crore.
Competition from Biocon and Wockhardt has made life tougher. And outside human insulin, where customers prefer convenience over price, Novo has had no answer to Lantus till Tresiba was launched. With Tresiba, Novo India wants to extract more from the franchise it has assiduously built up over the years.
Tresiba puts Novo back into the game, with what is being claimed as the next blockbuster product. A team of over 100 specially trained medical representatives are pitching to doctors to convert. And in six months, Tresiba has garnered 8% of the category’s market. Says Mads Bo Larsen, Novo Nordisk’s Dubai-based vice president of the region: “We are surely not going to give up our market leadership.”
Clearly, the stakes are high. While Novo is banking on the fact that Tresiba is ultra-long-lasting (effective for up to 40 hours compared with about half that for other drugs in the category, including Lantus), Sanofi is giving no ground.
One of Tresiba’s USPs is that it comes in a pre-filled injectible pen; Sanofi has developed an indigenous resuable pen, AllStar, priced at Rs 500, which is free to users who buy the first dose, to counter this. The slugfest between Sanofi and Novo is reminiscent of the cola wars a few decades ago.
When Novo pitched the long-lasting Tresiba to doctors, saying that patients needed to take a shot roughly every 36 hours, patients protested. They claimed that a daily drug allowed them to track their schedules better. So, Novo tried to say that Tresiba could also be taken once a day, at which point Sanofi hit back. If Tresiba and Lantus have the same periodicity, why are patients being charged such a premium for Tresiba, is the question Sanofi is asking.
Novo’s new pitch: The possibility of hypoglycemia (a side effect that diabetics on insulin worry about) is lower with Tresiba. But this may be a short-lived advantage. Next year, the patent on Lantus expires and Sanofi’s newer version of modern insulin, codenamed U300, is undergoing trials. The company claims that U300 has all the features of what Tresiba boasts of—long acting and reduced hypoglycemia. When Sanofi sells it as a better alternative, Tresiba’s growth will slow.
Meanwhile, Novo’s pricing strategy has resulted in some raised eyebrows. “I’m surprised Novo’s product here can be more expensive than Europe, especially when it resorts to predatory pricing for human insulin in government tenders,” says Kiran Mazumdar-Shaw, chairperson and managing director of Bangalore-based Biocon, Novo’s biggest local competitor.
But others in the industry say that pricing a frequently used drug (diabetes drugs are taken daily, lifelong) at global rates or above may signal the beginning of a trend in the pharma industry. A lower, differential pricing for India was the norm till India signed a treaty with the WTO in 1995, which barred local companies from copying drugs launched after Jan. 1, 2005. As a result, patented drugs can now be easily marketed and priced by their owners.
Novo also needs to fix distribution for Tresiba. Insulin is stored under refrigeration of 2°C to 4°C. In metros, the lack of infrastructure (read, power backup) limits the number of chemists who can store insulin. Typically, the same chemist stores insulin from Sanofi, Novo, Lupin, and others. And these chemists have been pushing non-Novo products, only because their pharma representatives back them hard.
Novo is now setting up its own agents network across the country. In Bangalore, it has enlisted Olivet Consultancy to help customers access Tresiba. Olivet is run by Paul Amirtharaj, an ex-Novo employee who has started his own consultancy and sales agency for devices like insulin pumps. It plans to expand the arrangement to other cities over a period. “A little delay in service can lead to the loss of a customer as there is usually an emergency associated with insulin demands,” says Amirtharaj.
That said, Novo India is certainly betting big on Tresiba. As is the rule, when drugs are launched globally, firms have to do a post-marketing trial (Phase IV trials) before a product gets the final nod. The more patients that are put on the drug, the easier it is to get that approval. In a way, getting more patients quickly in India will help Novo get approval for Tresiba.
Novo is on the job. Months before the insulin was launched, it set up a marketing team of 100 medical representatives, and has trained them thoroughly. They are being pushed to tell doctors that Tresiba maintains blood sugar levels twice as long as its competitor.
In October, for the launch, Novo invited over 2,000 doctors from across the country. Metros are its primary target, followed by large towns. Over 61% of Lantus’s sales come from the metros, and 23% from the towns.
D.G. Shah, a Pfizer veteran and head of the Indian Pharmaceutical Alliance comprising a handful of local companies, says that India is seeing the first flush of high-stakes pharma battles between MNCs. The stakes will only get higher as more and more companies start bringing in their pricier, patented drugs—a reason, analysts feel, why Britain-based GlaxoSmithKline recently paid $1 billion to increase its share by 25% in its Indian arm.
Also, amid all the price controls enforced on drugs last year, the government decided to dissolve a panel on patented drug pricing in December. Set up six years ago, the panel was expected to derive a mechanism to bring down the prices of patented medicines.
Thanks to street-smart promoters such as Glen Saldanha of Mumbai’s Glenmark Pharmaceuticals and Rajiv Nannapaneni of Hyderabad-based Natco Pharma, both of whom have won battles to launch cheaper versions of patented medicines, the clash promises to get more colourful. And credit must go to Novo for starting that trend.
