Novo Oh-No: ‘New & Improved’ Doesn’t Sell

The Wall Street Journal: “Danish drug giant Novo Nordisk is living through a corporate nightmare that any CEO might recognize from business school. After the company concentrated on making essentially one product better and better—and charging more and more—customers have suddenly stopped paying for all that improvement. The established versions are, well, good enough.”

“Doctors, health-plan managers and insurers all have balked at paying for Novo Nordisk’s newest version of its insulin. Clinical trials show it works as promised in controlling diabetes and delivers significant side benefits compared with its predecessors. But for many customers, all that isn’t enough to warrant paying more—because the older drugs on the market already work pretty well, too.”

“Common, deadly ailments, such as asthma, high cholesterol and heart disease, were the focus of the pharmaceutical industry during a golden age of drug launches in the 1990s. Now, building on those advances has proven costlier and more complex, and usually results in smaller gains. Incrementally improved medicines are harder to sell at the prices needed to cover their development costs.”

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