Novo Nordisk A/S Prefers To Grow On Its Own, Not Buy Others: CEO
August 27, 2014
By Mark Terry, BioSpace.com Breaking News Staff
With the stock market rife with rumors and speculation about mergers and acquisitions in the biotech space, Novo Nordisk A/S Chief Executive Officer Lars Sorensen recently said, “We have no plans whatsoever in buying anything larger than things that we can finance through our own cash flows.”
Novo Nordisk, headquartered in Denmark, has affiliates or offices in 75 countries and employees approximately 40,700 people worldwide. The company’s product areas are diabetes care, hemostasis management, growth hormone therapy, and hormone replacement therapy. In 2013, the company announced over $83 billion in net sales and a net profit of $25.2 billion.
In related news, Novo Nordisk recently acquired a manufacturing plant in West Lebanon, New Hampshire from Olympus Biotech. The company plans to use the facility to produce active pharmaceutical ingredients for its portfolio of drugs and medications. Some of the former employees of the plant have been offered jobs. The facility was originally established in 1989, then expanded between 2003 and 2006, when it was acquired by Olympus. Olympus used the plant mostly for mammalian cell manufacturing, which they phased out earlier this year.
Novo Nordisk markets generic insulin, patented insulin and insulin delivery system products. The company is working to launch a fourth-generation insulin treatment. Earlier this summer the company announced promising data from a new phase 3 study on Victoza® (liraglutide), a medication used to control diabetes and blood sugar. The study compared the drug with a placebo when added to pre-existing antidiabetic treatment, insulin or a combination, and potential effects on patients with moderate renal impairment. The study found the drug was effective and did not worsen renal function in adults with type 2 diabetes and moderate renal impairment.
Sorensen indicated that the market for insulin was large enough and growing quickly enough that the company did not need to grow through acquisitions. “We can still improve the insulins, perhaps another one or two generations. I’m not going to run out of innovation.” He also points out that major M&A activity can be very disruptive and distracting.
Sorensen also spoke out on so-called inversion deals, where U.S. companies acquire a smaller company in countries with lower corporate tax rates, then relocate their domicile to the company to avoid higher U.S. taxes. “I think it’s a little bit shortsighted because I’m convinced we will see political action in the U.S. against this, and I think some companies are feeling a little bit more wary about it now since it’s gotten a lot of public attention.”
