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Novo Nordisk in Japan Overview, status and opportunities. by Senior Vice President Roger Moore President of Novo Nordisk Pharma Ltd, Japan at Carnegie Bank A/S 27 November 2002. East Japan. Chubu. West Japan. Kanto. Kinki. Novo Nordisk in Japan. Sales force structure.

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novo nordisk in japan overview status and opportunities

Novo Nordisk in JapanOverview, status and opportunities

by Senior Vice President Roger Moore

President of Novo Nordisk Pharma Ltd, Japan

at Carnegie Bank A/S

27 November 2002

novo nordisk in japan

East

Japan

Chubu

West Japan

Kanto

Kinki

Novo Nordisk in Japan

Sales force

structure

Facts about Novo Nordisk in Japan…

  • Approx 700 employees (more than 400 in sales and above 100 in development)
  • Net sales of DKK 4,079 million in 2001 (17% of Novo Nordisk sales)
development in sales 1980 2001
Development in Sales 1980-2001

CAGR (1980 – 2001) = 22%

CAGR (1992 – 2001) = 13%

historical highlights
Historical highlights

1955 Kodama began import of Novo insulins

1975 Yamanouchi began import of Nordisk insulins

1980 Novo Yakuhin established as a 50/50 JV with Kodama

1990 Kodama agreement terminated and Novo Yakuhin

converted to 100%-owned affiliate

1990 Start of Novo Nordisk Pharma Ltd

1992 hGH business transferred from Yamanouchi to NNPL

1993-97 +50 MR recruitment plan

1998 Start of self-distribution

1999 Glucagon promotion / distribution assigned to Eisai

1999 Diabetes alliance with Takeda on Actos

2001 Launch of InnoLet® and NovoRapid®

2002 Launch of NovoRapid® FlexPen®

top 20 foreign pharma companies 2002
Top 20 foreign pharma companies, 2002

Sales

DKK million

Source: IMS 2002 (September – MAT)

Exch. rate: Average Sept. 2002 YTD

doing business in japan
A nation of contradictions

Strong culture, traditions

Rapid adoption of new technology

A nation in transition

Economic recovery – when?

Deregulation / markets opening

Institutional fatigue

A nation of opportunities

2nd largest economy

Most foreign companies have relatively small presence

Doing business in Japan
doing business in japan7
A nation of contradictions

Strong culture, traditions

Rapid adoption of new technology

A nation in transition

Economic recovery – when?

Deregulation/markets opening

Institutional fatigue

A nation of opportunities

2nd largest economy

Most foreign companies have relatively small presence

Customer Relations Mgmt the Japanese way

Innovative products key, but 0% defects expected

Pressure on prices

Towards global competitiveness

Changing corporate models

2nd largest pharma market

Major growth opportunity

Doing business in Japan

What it means for Novo Nordisk

the media picture of japan
A shrinking economy

Deflation

Increasing unemployment

Bankruptcies

Non-performing loans

Government not able to solve the problems

Is this picture correct?

Yes, but not complete!

The media picture of Japan
ageing population
Ageing population…

Source: Ministry of Health, Labour and Welfare (2001)

pressure on healthcare spending
… pressure on healthcare spending…

+5% CAGR

+7% CAGR

Source: Morgan Stanley

leads to regular price cuts
… leads to regular price cuts

Introduction of

consumption tax

Source: Morgan Stanley

the healthcare market in japan15
The healthcare market in Japan

Compared to Europe / the US

    • Hospitals and GPs sell drugs, however, this source of income is drying out
      • Pharmacies are gaining market share from hospitals and GPs
      • Decreasing margin to be shared between distributors and medical institutions
    • In general, patients get 70-80% reimbursed (National Health Insurance)
    • Twice as many hospital beds as in the US for half the population
    • Patients stay in hospital 5-6 times longer than in the US

Market size and dynamics

    • Japanese pharmaceutical market 6,000 billion JPY (ethical drugs)
    • Annual growth of approx 3%
    • MHLW: New vision for the Japanese pharmaceutical industry
  • Regulatory environment
    • MHLW approves product registrations and prices
    • Demonstrate medical merit and safety compared to existing products in Japan
    • Bridging with foreign data problematic, however getting easier
    • NHI price cuts and pricing of new products are problematic
japan ethical sales by hospital gp and pharmacy
Japan ethical sales by hospital, GP and pharmacy

Source: IMSBase-JPM (Japan Pharmaceutical Market)

2002* : Market Share as of Sept MAT 2002

the diabetes care market insulin oad market
The diabetes care market(insulin + OAD market)
  • Size     Approx 160 billion JPY
  • Growth 11% / year
  • Treatment M SGrowth rate
    • Insulin 31% + 8%
    • OAD 69% +13%
  • Competitors Takeda, Aventis, Bayer, Lilly,

Dainippon, Sankyo, Yamanouchi

  • Future trends Market growth of 10%+ expected: Insulin

analogues, prefilled devices and new OAD

products expected to drive growth

Company estimate , MAT Sep 2002

the japanese diabetes care market

Rest

13%

Novo

Nordisk

25%

Lilly

6%

Insulin

31%

Aventis

9%

OAD

69%

Bayer

9%

Takeda

38%

The Japanese diabetes care market

A USD 1.1 billion market growing at 12% 4Y CAGR*

A few large players

* Growth in local currency

the diabetes care market insulin market only
The diabetes care market( Insulin market only)
  • Size Approx 50 billion JPY
  • Growth 8% / Year
  • NNPL market share Approx 76%
  • TreatmentM SGrowth rate
    • Short-acting 26% +23%
    • Premix 50% +6%
    • Long-acting 24% -2%
  • Customers 8,500 HP & GP
  • Competitors Eli Lilly
  • Future trends Increase in use of analogues (currently 8%

penetration) and increased use of prefilled

devices

Company estimate , MAT Sep 2002

novo nordisk and the diabetes care market
Novo Nordisk and the diabetes care market
  • Novo Nordisk’s productsVial :~5% Prefilled :~20% Cartridge :~75%
  • Novo Nordisk products in pipelineFull range (FlexPen®, InnoLet®), NovoMix30,

NN304 , NN1998, NN2211

  • Historic and current market position 1955: Kodama Pharma starts selling insulin of Novo brand.1988: Launch of NovoPen®1992: Recombinant insulin was launched.1994: Launch of NovoLet®2001: Launch of rapid-acting insulin NovoRapid®, InnoLet®
  • Novo Nordisk’s strengths and challengesStrengths The leading insulin company Product line-up Device superiority

Challenges Aventis entry in insulinNew analogue products introduced later than competition

insulin market volume development

180

160

140

120

100

80

60

40

20

0

Insulin market volume development

8.5% 4Y CAGR

1997

2002

2000

2001

1998

1999

* Index as Q1 1997 = 100

upgrading the japanese insulin market
Upgrading the Japanese insulin market

Prefilled

Device

Penfill®

Insulin analogue

Human insulin

move from durable to prefilled devices

Cartridge

Prefilled

Vial

Move from durable to prefilled devices

Total insulin market volume, Japan

100%

80%

60%

40%

20%

0%

2000 Q2

2000 Q3

2000 Q4

2001 Q1

2001 Q2

2001 Q3

2000 Q1

1999 Q2

1999 Q3

1999 Q4

2001 Q4

2002 Q1

2002 Q2

new insulin products to underpin strategy
New insulin products to underpin strategy

Lauched April 2002

Young people

Patients preferring a pen

Doctors preferring a pen

Older people

Patients preferring a doser

Doctors preferring a doser

Lauched July 2001

slide27

Patients segment and preference

Geriatric pts.

Middle-age pts

Geriatric pts

Young pts

(number)

10s, 20s

60s

30s-50s

Over 70

NovoPen® 3

22

21

9

2

NovoPen® 300

13

21

9

-

Ergo Pen

15

25

22

11

NovoLet®

11

25

7

4

HumaKart Kit

16

21

13

7

InnoLet®

5

6

20

32

NovoPen300 Demi®

28

10

2

2

FlexPen®

27

25

27

24

Sources:SSRI survey on injectors of kit products

an early peek at the implementation
An early peek at the implementation

Novo Nordisk market shares in the prefilled segment

66.9%

8.7%

0.5%

the market for growth hormones
The market for growth hormones
  • Size Approx 60 billion JPY
  • Growth -1% / year
  • NNPL market share 28%
  • TreatmentM S Growth rate
    • Vial 5% -39%
    • Cartridge 93% -1%
    • Prefilled 2% -31%
  • Customers 2,400 HP & GP
  • Competitors Pharmacia, Lilly, Sumitomo
  • Future trends Presently the market growth is very low,

but will likely increase coming from new

indications (eg GHDA and IUGR/SGA).

Company estimate , MAT Sep 2002

novo nordisk and the market for growth hormones
Novo Nordisk and the market for growth hormones
  • Novo Nordisk’s products
    • Vial :~1% Cartridge :~99%
  • Novo Nordisk new indications and devices in pipeline
    • eg IUGR/SGA
  • Historic and current market position
    • 1977: Yamanouchi Pharma started selling human growth

hormone ‘Nordisk‘

    • 2000: Launch of liquid growth hormone: Norditropin® S
  • Novo Nordisk’s strengths and challenges
    • Strengths Product superiority Long experience of Nordisk, YMN and NNPL
    • Challenges Increase market share in a decreasing market.
the growth hormone market in japan

1600

1400

1200

1000

800

600

400

200

0

The growth hormone market in Japan

Modest volume growth

A few large players

Serono 2%

Gram

Sumitomo

12%

Pharmacia

35%

Lilly

21%

Novo Nordisk

28%

2001

1998

1999

2002

2000

1997

norditropin simplexx and development key to market share gain
Norditropin® SimpleXx® and development key to market share gain
  • hGH specialist sales force
  • Development of new indications and devices
    • eg IUGR/SGA
  • Expansion of marketing tools, scientific information and activities
novoseven in japan
NovoSeven® in Japan
  • Market size Less than 10% of world market
  • Launched in Japan In 2001
  • Sales Less than 5% of total NovoSeven® sales
  • Customers 150 HP & GP
  • Competitors Baxter (Feiba Immuno , Proplex , AutoPlex)
  • Future market for NovoSeven
    • Increase awareness of NovoSeven® via education of doctors
    • Independent NovoSeven Business Unit has been established with own sales force
    • Development of new indications
      • Japan included in the global intra-cerebral hemorrhage bleeding study
      • Japan planned to be included in future global NovoSeven® studies
the future for novo nordisk in japan
The future for Novo Nordisk in Japan
  • Challenges
    • Maintain high insulin market share facing increasing competition from Lilly and Aventis analogues
    • Strengthen hGH market position
  • Strengths
    • The best customer satisfaction ratings in diabetes care
    • The best and most innovative device portfolio with fast adoption
    • Highest attention to product quality
  • Strategy
    • Value upgrade of insulin to offset pressure on market shares and bi-annual price reductions
    • Increase hGH market share in a flat or decreasing market by re-focusing sales, marketing and development efforts
    • Increase NovoSeven® use and develop new indications
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