When Ozempic and Wegovy launched, their bombshell success was only going to be exclusive to their maker—Novo Nordisk—for a matter of time. While the Danish pharma giant holds the patents to these GLP-1 medications for the time being, some are due to expire as early as next year.
Novo Nordisk shares dropped on the update before quickly rebounding, but its stock remains on a downward trajectory. Its share price has fallen more than 50% year to date.
After a companywide restructuring costing some DKK 9 billion ($1.38 billion), Novo’s path to success lies in its ability to create the next health-care-altering drug. This, says Novo CFO Karsten Munk Knudsen, will be the “silver bullet” to defending key markets from competitors.
“The ultimate defense in our industry is in innovation,” Knudsen told Fortune in an exclusive interview. “So clearly we do everything we can to push innovation forward: That could be the Wegovy pill that we hope to launch next year in the U.S.; that could be our third-generation product CagriSema that we hope to submit in the coming months; and then push … forward also amycretin. So innovation is really the silver bullet here.”
For the patents on some of Novo Nordisk’s hero products in certain regions to be running out is an inevitable headache—companies can only hold them for so long before competitors are able to launch their own products. To win a patent is the prize for pushing the needle, Knudsen said, and after a period of breathing room, companies must go to battle for consumers: “This is how it is for our industry. The way we deal with it vis-à-vis our shareholders, first and foremost, is that we’ve been very transparent with the impact from countries where our patent … lapses into next year.”
The company sees a low single-digit negative impact because of the expirations next year, Knudsen added: “In those specific markets then, we adapt our strategies, and we do not intend to leave these markets whatsoever, and intend to defend our market position.”
The real snag will come in the next decade: The U.S. represents 50% of group sales for Novo Nordisk, and while there is a “good runway” until the early 2030s, that’s when patents in America run out, and the true battle begins.
Knudsen also said he doesn’t see consumers moving away from Novo Nordisk products following cases alleging serious side effects from taking them. “This class of products has been around, just in our portfolio, for more than 15 years, and we are reaching millions of patients with our products,” he said. “Clearly that would not be the case if there are any material concerns around safety around our products.”
Nonetheless, the suits could prove costly and lengthy—potentially having a material impact on the company’s bottom line.
“First and foremost, I do believe that we have a highly capable global legal function, and the best way to deal with legal situations is to prevent them from occurring in the first place,” Knudsen said. “The best defense is prevention, and from there it’s really about the legal capabilities both with our in-house function and with our external legal advisors that we use.”
Financially, he added, risks are evaluated on a rolling basis: “We have a reasonable risk profile on that front. It’s something that … we assess on an ongoing basis … and then what insurance coverage do we have, how strong is our legal position, and I think we’re in a reasonable position.”
