Although many big players like Pfizer, Merck and GlaxoSmithKline have gone backward this year, Novo Nordisk (NYSE: NVO) is emerging as a star, according to Steve Goldstein of MarketWatch. While the pharma giants face generic competition, shrinking pipelines and price pressures, the Danish drugmaker has a market capitalization approaching $39 billion, annual revenue of nearly $10 billion and 29,000 employees.
Goldstein explains that Novo is profiting as increasing number of people develop diabetes, and the industry so far has had a hard time copying the company's insulin products. In an interview with Asian Investor, Andy Acker, portfolio manager and equity research analyst for healthcare at Janus Capital, says Novo also is likely to benefit because of the unfortunate rise in the rate of diabetes in countries like India and China as they adopt a more Western diet.
Sales of diabetes-care products at Novo improved 11 percent in the first quarter, and the company says it's capturing 82 percent of the market share growth in these segments. The company also is pinning its hopes on Victoza, a once-daily diabetes treatment that uniquely isn't associated with weight gain.
Not everyone is jumping on the Novo bandwagon, however. Emmanuel Papdakis, an analyst at London-based Collins Stewart, expressed skepticism with Victoza's prospects, pointing to Eli Lilly's Bydureon and noting Roche, GSK and Sanofi-Aventis are working on potential rivals to the drug. And Royal Bank of Scotland analyst Michael Leacock says Novo and others should be wary of biosimilars, which could pose a threat by 2012, Goldstein notes.