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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 l.jpg

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 l.jpg

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 l.jpg
Development in Sales 1980-2001

CAGR (1980 – 2001) = 22%

CAGR (1992 – 2001) = 13%


Historical highlights l.jpg
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 l.jpg
Top 20 foreign pharma companies, 2002

Sales

DKK million

Source: IMS 2002 (September – MAT)

Exch. rate: Average Sept. 2002 YTD


Doing business in japan l.jpg

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 l.jpg

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 l.jpg

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 l.jpg
Ageing population…

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


Pressure on healthcare spending l.jpg
… pressure on healthcare spending…

+5% CAGR

+7% CAGR

Source: Morgan Stanley


Leads to regular price cuts l.jpg
… leads to regular price cuts

Introduction of

consumption tax

Source: Morgan Stanley



The healthcare market in japan15 l.jpg
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 l.jpg
    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 l.jpg
    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 l.jpg

    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 l.jpg
    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 l.jpg
    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 l.jpg

    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 l.jpg
    Upgrading the Japanese insulin market

    Prefilled

    Device

    Penfill®

    Insulin analogue

    Human insulin


    Move from durable to prefilled devices l.jpg

    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 l.jpg
    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 l.jpg

    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 l.jpg
    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 l.jpg
    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 l.jpg
    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 l.jpg

    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 l.jpg
    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 l.jpg
    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 l.jpg
    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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