Drug maker Novo Nordisk invests $744 million to expand Danish plant

Drug maker Novo Nordisk invests $744 million to expand Danish plant
© Reuters. FILE PHOTO: Flags are seen outside Novo Nordisk headquarters in Copenhagen, Denmark, February 5, 2020. REUTERS/Jacob Gronholt-Pedersen/File Photo

COPENHAGEN (Reuters) -Danish drug maker Novo Nordisk (NYSE:NVO) said on Tuesday it plans to invest 5.4 billion Danish crowns ($744 million) to expand its facilities in Bagsvaerd, Denmark.

The world’s biggest producer of diabetes drugs, Novo said the project is expected to be finalised in 2024 and create about 160 new jobs.

The investment would add capacity in research and development for manufacturing of active pharmaceutical ingredients (API), the main biologically active components of medicines, to supply its global clinical trials.

“This investment in expanding our clinical API capacity in Bagsvaerd is an important step to ensure the continuous progress of our development pipeline,” said Jesper Boving, senior vice president of chemistry, manufacturing and control development.

Novo Nordisk currently produces API at two facilities in Denmark and one in Clayton, North Carolina, in the United States, a spokesperson told Reuters.

With its focus on common conditions such as type 2 diabetes and obesity, the company’s trials often involve tens of thousands of participants.

Analysts estimate the future obesity market to be worth tens of billions of dollars.

The company raised its full-year earnings outlook earlier this month, after reporting a better-than-expected quarterly profit driven by strong sales of its diabetes treatment Ozempic.

Analysts have speculated that Ozempic demand is partly driven by prescriptions for non-diabetic patients seeking to lose weight, which is outside the drug’s approved indication.

The main active ingredient in Ozempic is semaglutide, which is also the key ingredient in Novo’s obesity drug Wegovy. The drugs belong to a family of medicines known as GLP-1 analogues that are designed to regulate hunger.

Wegovy won U.S. regulatory approval as a weight-loss therapy last year, but the drug was almost immediately in short supply due to manufacturing problems and high demand.

The company said earlier this month that it is prioritising boosting manufacturing capacity for future obesity drug launches following the bungled Wegovy introduction.

One of its major drug development prospects is a two-drug combination known as CagriSema, or cagrilintide plus semaglutide, to meet future demand for better weight-loss options.

In that market, Novo is expected to face keen competition as rival Eli Lilly (NYSE:LLY) is working to get its Mounjaro drug approved for obesity.

But the benefits of obesity drugs such as Wegovy on healthcare systems such as the U.S. one are so significant that the expected entry of rival drugs will not hurt Novo’s margins, CEO Lars Jorgensen told Reuters last week.

Europe’s drugmakers warned in September that they may stop making cheap generic drugs because of soaring energy costs.

($1 = 7.2572 Danish crowns)