FDA approves Novo Nordisk diabetes drug Ozempic

The U.S. Food and Drug Administration on Tuesday approved Novo Nordisk A/S's diabetes drug Ozempic, setting the stage for a heated battle with Eli Lilly & Co's Trulicity.

Ozempic, known generically as semaglutide, will compete with others in a class known as glucagon-like peptide-1 (GLP-1) analogs, which imitate an intestinal hormone that stimulates the production of insulin.

The approval comes as Novo Nordisk faces pricing competition to its existing diabetes products. The company is banking on Ozempic to help drive the overall growth of the GLP-1 market, which includes Trulicity and AstraZeneca Plc's once-weekly Bydureon.

Novo Nordisk is betting that Ozempic's proven heart benefit and weight-loss advantage over rival products will increase its attractiveness both to physicians and insurers.

Analysts on average expect annual sales of Ozempic to reach $3.17 billion by 2023, with sales of Trulicity, which was approved in the United States in late 2014, reaching $3.71 billion over the same period, according to Thomson Reuters data.

Analysts at Credit Suisse estimate that by 2022 Novo Nordisk will have captured roughly 60 percent of the GLP-1 market compared with an expected 53 percent in 2017. They expect Lilly's GLP-1 share will increase to 33 percent from 29 percent over the same period.

Diabetes drug companies are under pressure from insurers to offer attractive prices in return for a formulary position, the list of medicines approved by an insurance company for reimbursement.

Dr Todd Hobbs, Novo Nordisk's chief medical officer, has said the company planned to "take a very competitive strategy with the payors" in order to gain market share. He said the company has strong relationships with prescribers built up over the years with Victoza.

GLP-1 products are also expected to face increased competition from biosimilars, less expensive versions of rival diabetes drugs.