Novo Nordisk to add 615 jobs

Posted: April 29, 2012

The number of diabetics in America is growing.

The number of unemployed pharmaceutical workers seems to be doing the same.

That combination is bad, unless you are Novo Nordisk.

A relatively small Danish-based drug company with a U.S. home in Princeton, Novo Nordisk is in a sweet spot in the pharmaceutical landscape because the core of its business is diabetes. With 40 straight quarters of double-digit growth, the company said Friday it plans a 15 percent increase to its U.S. workforce, meaning about 615 more jobs, through the end of this year.

“A lot of people are not working in our industry right now,” said Andy Ajello, corporate vice president for diabetes sales. “But we’re thriving and able to recruit the best.”

Some 13,000 health-care professionals will gather June 8-12 at the Philadelphia Convention Center for the American Diabetes Association annual meeting. Nearly 26 million Americans have diabetes and 79 million have prediabetes, according to the Centers for Disease Control. About $174 billion is spent on diabetes, but that CDC figure is from 2007 and has probably grown.

With either type 1 or type 2, diabetes is a problem of too much sugar in the blood.

About 5 to 10 percent of diabetics are type 1, which used to be called juvenile diabetes because it usually arrives in school-age children. With type 1, the pancreas stops making insulin, which breaks down sugars in foods, so insulin must be administered through a syringe, a pen-like device with a needle and cartridge holding the insulin or a pump. Diet and blood glucose must be monitored through the day. There are guesses, but no known cause.

Type 2 is less acute, but more pervasive and can be just as deadly in the long-term side effects — heart, kidney and eyes problems, among them. It is also preventable, in many case. America’s obesity problem manifests itself in more type 2 diabetics, whose bodies don’t use insulin properly and then the overworked pancreas stops producing it. Type 2 diabetes is still rare in children and adolescents, but it is appearing more frequently now than in the past, especially in some ethnic groups.

Novo Nordisk president Jerzy Gruhn is a type 1 diabetic who uses a pen because it fits his lifestyle, which includes traveling for business, rock climbing and cycling. Told that his type 2 diabetes market would largely disappear if Americans could eat less and exercise more, Gruhn laughs with resignation about human habits.

“Yes, we do realize that, but the disease will not go away,” Gruhn said.

That’s why almost every big drug company wants a slice of the market, though not all have products in all categories. Good diet and regular exercise are prescribed for every diabetic, but the CDC estimates that 58 percent use only oral medication, 14 percent use pills and insulin, 12 percent only insulin and 16 percent take no medication.

The pill Januvia had $3.3 billion of Merck’s $48 billion in total sales in 2011. The most-prescribed pill is the generic metformin, according to IMS Health, a health care information and services company.

Amylin Pharmaceuticals and Novo Nordisk, with its relatively new drug Victoza, are trying to grab a middle market for non-insulin injectable medicine, often combined with a pill.

Novo Nordisk, Eli Lilly and Sanofi-aventis are the three insulin leaders. The latter two are bigger and more diverse, but also face future patent and profit problems related to non-diabetes medicines.

Conversely, Novo Nordisk was born of 89 years of research by two Scandinavian laboratories and companies focused on insulin, and 77 percent of its $11.8 billion in total sales for 2011 were in diabetes products.

“Novo Nordisk consistently has been at the forefront of diabetes care, and we expect the firm’s relative lack of patent exposure and favorable industry dynamics to continue to drive strong returns on shareholder capital,” Morningstar analyst Lauren Migliore wrote in February.

With about 4100 U.S. employees already, the 15 percent increase will be mostly sales reps, for which the company budgets $200,000 per year in salary and benefits per rep. It is distributing a book with clothing suggestions for men and women for eight scenarios, so reps don’t stick out with threads that look too expensive.

“Give me an example of personal time or energy that you used to benefit a patient organization,” Jeff Frazier, vice president for human resources, said when asked for typical interview questions.

Novo Nordisk has had some difficulties and criticism. It hired celebrity chef Paula Deen as a spokeswoman, despite her love of the deep-fat fryer and high-calorie dishes three years after she was diagnosed as a type 2 diabetic. The company stands by her.

Barclay’s Capital analyst Peter Bourdot downgraded the stock (NVO) last week because he was not sure it could continue its current ascent, in part because Victoza might be too expensive over time against the many competitors. Indeed, the stock fell 4.28 percent to $144.55 at the close Friday, after analysts feared that first-quarter earnings showed a slowing of growth. Three years ago the stock was at $51.93.

The consumer group Public Citizen petitioned the U.S. Food and Drug Administration to have Victoza removed from the market for putting patients at a higher risk of thyroid cancer, pancreatitis and kidney failure.

“I think the drug is safe,” said Gruhn, who is happy that his company is bucking the industry hiring trend and will also add scientists.

“Our industry is based on R&D,” Gruhn said. “If you don’t invest in R&D, what else will we be doing?”

Contact David Sell at 215-854-4506 or dsell@phillynews.com, or on Twitter @PhillyPharma. Read his PhillyPharma blog on philly.com.

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