諾和諾德 (NVO) 2021 Q1 法說會逐字稿

Hello and welcome to the Q1 2021 Novo Nordisk A/S Earnings Presentation. (Operator Instructions) Today, I'm pleased to present Karsten Munk Knudsen. Please go ahead with your meeting.

Thank you, and welcome to the Q1 results meeting for Novo Nordisk. Today with me, I have Camilla Sylvest, Head of Commercial Strategy; and Martin Lange, Head of Global Development. So before moving into our investor presentation, I'd just like to thank Keyur Parekh and Goldman Sachs for orchestrating this London lunch conference meeting. We had been looking forward to meeting you all in person as we did a year ago. And hopefully, we'll be getting closer to meeting in-person in coming quarters.

So we'll -- the process for this meeting is that we'll do a quick review of our quarterly slide deck. It'll last to the tune of 15 minutes, after which we will be moving on to a Q&A session.

So -- and as you know, the statements we make around the future are inherently bound by uncertainty. The results can differ from what we indicate either positively or negatively, but that's how it is predicting around the future.

In terms of our strategic aspirations for the first quarter, as you recall, this is how we portray the company and the strategy execution of the company. Then we continue to have very strong traction on our strategic aspirations as we did last year, but also here into the first quarter. So we continue to execute on our Defeat Diabetes social responsibility strategy through different activities with -- here with the University of Toronto as well as the World Diabetes Foundation for both focusing on prevention and access. Furthermore, we are progressing on our environmental strategy, Circular for Zero, where we are aiming at becoming a circular company by 2030. We are progressing well, as we reported last year, on our CO2 emissions from manufacturing getting to neutral, which we're already there. Now we're focusing on additional areas. And what you see here is that in terms of suppliers, CO2 emissions, now we have commitments corresponding to 15% of our supply emissions to be CO2-neutral in the time to come.

On our pipeline innovation and therapeutic focus, we have received regulatory approval for Ozempic in China, which we see as a big opportunity in the years to come, providing better diabetes medications for patients in China. On obesity, we have decided to initiate a clinical development on a high dose version of oral semaglutide, a 50-milligram version that Martin will come back to. And in other serious chronic diseases, we have initiated the development of once-weekly semaglutide 2.4 mg in next, which Martin will also come back to.

As to commercial execution, we are continuing to gain diabetes value market share here with 60 basis points. We are continuing to grow our obesity business, where, as you recall, we are aiming at more than doubling our sales by 2025 compared to 2019. So a lot of focus on growth in our obesity business. And biopharm sales increasing by 1 percentage point, up by 1% in the first quarter. So solid sales there also. Financially, that yields a 7% sales growth and 3% operating profit growth, driven by both operating units and a clear step-up in growth from our business in North America, driven by the U.S.

Margins continuing to be attractive and a continuing focus on productivity gains. And consequently, a free cash flow generation of almost DKK 10 billion in the quarter and DKK 16 billion returned to shareholders between dividends and continued share buybacks.

When we look at our global sales growth and contribution split on our 2 main dimensions, then you see a 7% growth, which when you adjust for stocking, both last year and this year, then our underlying run rate on top line is more representative around 9% driven by continued strong growth in IO, around the double-digit or even slightly above, while we're looking at growth in North America at the 6% mark and adjusted even slightly higher. Compared to last year, this represents a good step-up in North America, where we reported 3% constant exchange rate growth last year. As to therapy areas, then the key growth driver of the company is our GLP-1 business growing at 23%, being the main growth driver. You see solid growth both in North America as well as in IO. Insulin is flat. So we continue to see solid growth in IO, while the insulin decline in the first quarter is 10% compared to around the 20% mark we looked at last year. Obesity, I call it 9% split between IO and North America. And finally, Biopharm, 1% growth.

With that, over to you, Camilla.

Yes. Thank you, Karsten. On diabetes value market share, we continue to expand our leadership. And with the latest annual numbers, we have increased with 0.6 percentage points to 29.3 percentage points global diabetes value market share. This is primarily driven by an increase in market share from GLP-1 of close to 3%. And in insulin volume, we also increased our market share approximately 0.6 percentage points. And altogether, that ends at the diabetes value market share of 29.3%. In the last 12 months, we have, as I just mentioned, also increased our market share in the total GLP-1 segment, but also in the U.S. and here, you see our total insulin -- our total GLP-1 market share of 58.0% on NBRx and just above 50% on the total scripts.

If you look at the next slide, you will see that Rybelsus continues to increase NBRx uptake. You see here that there is a continued uptake that has been impacted by the reps in the field. And that means as soon as reps are back in the field, we see an uptake back to the original trend. Rybelsus has now been launched in 15 countries, and there is an increasing preference and awareness amongst HCPs. And we also continue to do direct-to-consumer advertising to support the uptake of Rybelsus where now more than 80% of the new scripts are new to the GLP-1 class. Also in Japan, we have launched Rybelsus into the oral market where that is 80% of the total diabetes market and here, we have reached a market share of 0.5% of the modern oral antidiabetic market so far.

In IO, we continue a very solid diabetes sales growth across all regions. You see here total IO diabetes reported sales of 10%. And in geographical areas, EMEA, also growing, same with China and rest of world, significant double-digit growth. This also means that our share of growth in the total diabetes value market share in value market in IO is significantly above our market share. That is due to that increase 1.4 percentage points in the last year.

In obesity, we see Saxenda growing 9% in the first quarter. That is up against the 3% that we grew full year last year. You see also Saxenda having been impacted by COVID-19, but is now back on a positive trajectory. That -- and we continue to gain both value and volume market share in obesity.

And in Biopharm, sales growth of 1%, primarily driven by North America and unchanged sales in international operations. The rare blood disorder sales increased 2%, and then the rare endocrine disorder sales increased also by 2%.

So with that, I would hand over to Martin Lange.

Thank you very much, Camilla. So looking broadly across our NDA activities, we are progressing our early-stage but also our late-state pipelines across the therapy areas that we are now moving in. Diving into 2 aspects, first being initiation of our Phase III trial for semaglutide 2.4 milligram in NASH. This is building on the finalization of our Phase II trial for which we have been granted breakthrough designation from the U.S. FDA, allowing us together with the now initiated Phase III trial to serve as the basis for our regulatory submission. The Phase III trial is a fairly large 1,200-patient trials, where we look to randomize patients to either semaglutide or placebo based on a background or both on a background of standard of care. The trial will be conducted in 2 parts: Part one being a 72-week trial looking for a binary histology endpoint, one being resolution of NASH with no worsening of fibrosis; the other being improvement in liver fibrosis with no worsening of NASH. We will base the regulatory filing, as I said, on the combination of the Phase II trial that has been reported as well as Part 1 of the Phase III trial. The trial, however, will be continued in Part 2, where we will be looking for a 240 weeks of treatment and liver-related outcomes as the key endpoints.

Next slide, please. Also very exciting in acknowledgment of a tremendous unmet need still in obesity also in terms of having an opportunity to broaden our pallet of offerings going beyond injectables, we've decided to, in Q3, initiate a program to evaluate oral semaglutide 50-milligram versus placebo in the obesity space, obviously, looking at weight loss as the primary endpoint. The 650-patient study will, together with 2 other studies, serve as the entire program, thus building on the well-known safety efficacy profile of semaglutide and allowing us to bridge to the data and the labels already established for semaglutide.

Next slide, please. So looking at the broader R&D milestones for '21, as discussed we are conducting both early and late-stage activities across our therapy areas starting in Q1. As already mentioned, we submitted but also received a refusal to file for our 2.0 milligram semaglutide for the treatment of diabetes. The refusal to file was related to more data being requested on manufacturing. And we are currently working to resubmit the file during the course of Q2 of this year.

Also in Q1, we initiated in acknowledgment of a tremendous unmet need in patients with heart failure and preserved ejection fraction, as started evaluating the effect of semaglutide 2.4 milligram in this space, aiming to show improved quality of life and improved activities performance in these patients where no treatment currently exists. In Q2, we are looking very much forward to receiving the U.S. FDA decision on our obesity submission for 2.4 milligram of semaglutide. We also, in Q2, aim to initiate basically later this month, our Phase III program for Alzheimer's disease, which also is evaluating semaglutide versus placebo in the treatment of mild cognitive impairment or early dementia in Alzheimer's.

Moving to Q3, we expect to see a readout of our innovation in -- our early innovation in insulin therapy. But we also expect to initiate our cardiovascular outcomes trials to evaluate the newly acquired ziltivekimab compound in the space of atherosclerosis, combined with inflammation.

Moving to end of the year, we expect to have an EU decision on the obesity semaglutide 2.4 milligram assessment. We expect readout of our Sogroya data for growth hormone deficiency in the pediatric space. And we also expect, as per plan, to see a clinical readout of the ongoing Phase I/phase II Mim8 studies. This is a little bit complex because we will actually see readouts based on cohorts throughout the next quarters, but we will look at the final assessment in Q4 of this year.

With that, back to you, Karsten.

Thank you, Martin. Then we have our P&L for the first 3 months, so 7% sales and 3% profit, as I covered before. Gross margin down by 130 basis points, of which 80 is related to currency, and the majority of the remainder is impacted by amortizations of the Emisphere acquisition we concluded in the fourth quarter of last year. Sales and distribution costs up 16%, driven by front-loading of DTC investments and general investments behind Rybelsus and the launch of that brand, whilst we continue to invest in research and development costs linked to the portfolio of projects. Margin was just going through. All in all, net profit growth of 6% and EPS growth of 8%.

Next slide. We experienced a significant currency headwind in the first quarter and hedged that accordingly. So 1.8 negative impact on currencies, of which we offset half by hedging gains as described in our company announcements.

Next slide. Our outlook for the year. We have on this slide. And we've not been all the way back in our history books. But I would say this quarter marks the first time in several years, many years, where we increased our guidance, not only the floor but already here in the first quarter. So that is, of course, a clear indication of a strong start of the year and a solid outlook for the remainder of the year. So now our sales growth outlook is 6% to 10% and operating profit growth outlook is 5% to 9%. No changes to currencies or tax rate. And then as a consequence of the stronger business performance and slightly lower CapEx outlook, now we're looking at -- we're increasing our free cash flow outlook to now between DKK 37 billion and DKK 42 billion, and as a consequence increasing our share buyback from DKK 17 billion to DKK 18 billion.

Next slide, please. So this marks our walk-through our first quarter performance across the 4 dimensions in our strategic aspirations as well as our guidance for the full year.

And we're now ready to move into Q&A. And please constrain yourself to 2 questions per person.

And I believe, we have the first question from Keyur Parekh.

This is Keyur Parekh from Goldman Sachs. Can I kick off the first question where you ended, which is on our kind of records, this is the first time since 2008 that you've raised guidance on the top end in the first quarter. And I know there was some discussion on the call yesterday, but would love to understand what are the franchises where you are doing better than you originally expected. Is it kind of higher GLP-1 growth? Is it lower insulin kind of degradation in price? Is it slightly earlier pickup of obesity trends? Is it better biopharma? So if you can help us understand that on a franchise level, that would be great.

And then secondly, as we think about the longer term, when you provided your strategic aspirations to 2025 back in November 2019, most of us assumed or kind of concluded that, that meant kind of 5%, 6% compounded revenue growth kind of through that period. Your first year posts that. So 2020 was 7% CER and the midpoint of your guidance range today is 8% CER. So kind of can you help us understand when might be the right time for you to qualitatively or quantitatively address your strategic aspirations? Or does the growth profile kind of revert downwards post 2021, '22, which I kind of struggle to see?

Thank you for those 2 questions, Keyur. And I think I'll cover both of them and then my colleagues can jump in if relevant. So first of all, raising our outlook, top line for the first time in more than 10 years is, of course, not something we do lightly and we never kind of change our outlook lightly without thorough evaluations. What -- it's basically a function of 2 things: first, a very strong start to the year, so the underlying 9% run rate in the first quarter; and then secondly, the indication we're looking also through April and the new-to-brand scripts we're seeing and the pickup both in the obesity business and the Rybelsus business, indicating solid trend for also going into the second quarter. And then finally, the risk level that we're looking at vis-à-vis the potential risks for the full year that we had when we guided back in February. That could be COVID and health care reforms. So this is not only on one therapeutic category. This is actually a strengthening outlook across the 4 different categories.

As to our 2025 strategic aspirations, there you recall that we moved away from having, you could say, one single target, focusing very much on operating profit growth into a broader communication base on the fourth quadrant and strategic aspirations. And our key focus point on top line was to deliver solid sales growth as well as solid operating profit growth. And that remains unchanged. Then you could say, we are off to a very good start. We grew 6% in '19, 7% in '20. And now we have a midpoint of 8%. So we are truly delivering according to the growth outlook. So what you should be looking at is whether we're trending on market shares also and which is also the case. So at this point, we don't see any fundamental need for changing anything in our strategic aspirations. But -- and overall, we believe that we are very well underway to deliver on what you already put out.

Next question comes from the line of Kerry Holford from Berenberg.

Firstly, on stocking. A question here about the stocking that we saw in the first quarter of last year had the pandemic, which you cited was largely patient-level stocking. Has the majority of that now unwound through last year? And where does that now stand as we finish Q1 '21? So with those dynamics in mind, what is the average shelf life for the products that were stocked in early 2020? And how would that play into new orders from those patients?

And then secondly, on high dose oral semaglutide, I understand the trial protocols will require, I think, it's 18 weeks dose escalation to get to the highest dose, 50 mg. So given the discussion points we've had before around that sort of onerous dose titration requirements for Lilly's tirzepatide, I'd just like to hear your thoughts on what makes you more confident now that, that's sort of similarly lengthy time line will be acceptable for patients. Do you have any compliance concerns, et cetera?

Great. Thank you, Kerry, for those 2 questions. If I cover the -- your stocking question, then Martin, if you'll cover the oral sema 50-milligram.

So Kerry, as you alluded to, first quarter last year, we had stocking of DKK 2 billion of which a big part was related to patient-level stocking and the remainder on wholesaler. And wholesaler stocking pretty much flipped in the second quarter of last year. And hence, the remainder was at patient level. It's really hard to tease out patient-level stocking. So that's not something we report and track on an ongoing basis. You should anticipate to a question on shelf life that we, as a minimum, have 2 years of shelf life on the products that we supply to the markets when we ship to wholesalers. So on that front, there could still be some destocking gradually during kind of the latter part of '20 into '21 and perhaps even '22, but it's impossible to tease out what would be destocking and if it will be consumed or what.

Martin, then on oral semaglutide 50-milligram?

Yes. I think it's important to recall that already at 7 and 14 milligrams, we are at pharmacology active doses, so already accruing better glycemic control but also weight loss at that doses, so during a 15-week escalation, we actually see that patients adhere very nicely to this. And we see that people in our ongoing high-dose diabetes trial appear to be accepting this dose escalation in good form.

The next question comes from the line of Peter Verdult from Citi.

Peter Verdult, Citi. 2 questions. Karsten, just -- you and the management team, I realize this has only happened overnight, but just how worried are you about efforts to avoid IP relating to COVID vaccines spilling over to other essential medicines such as insulin?

And then just as a sort of part B to that sort of pricing question. Just look, China, we all know that there's a great long-term story here because of your portfolio, but the current portfolio is mainly older drugs. So I know you're saying that you still need to see what the proposals are, but is one of the scenarios that you see sort of [VBP-esque] where you lose half your business in Year 1 and then you return to growth from strong volumes. Is that even plausible in your view? And if not, why not? So that's pricing question.

And then more quickly to Martin on the pipe. Any timing update on SOUL and SELECT readouts? Any signals we're seeing from the program that's worth sharing? And just to be clear, the oral sema strategy, is that about initiating a patient who then if they need to intensify therapy would go on to 2.4 mg injection? Or are you trying to match the efficacy of 2.4 mg with 50 mg oral?

Great. Thank you, Pete, for that handful of questions. So if I start out on patents and China. And then Martin, then if you cover SOUL and SELECT.

So Pete, on the patent issue in the U.S., which emerged on COVID-19. Then actually, we do not believe that the existing patents are a barrier to the rollout of COVID-19 on a global scale. So we don't think it will make a difference in terms of supply of COVID-19 vaccines for a number of reasons. Then as you know, for at least our older insulins, they are out of patent in the U.S. So that discussion is kind of totally, completely void. And then, of course, it's important, as we all know, that this industry is based on a well-functioning patent system. That's why the industry at large why we take huge risks and invest billions of kroner developing highly risky projects to the benefit of patients and societies. So if that's not in place, of course, that will have very deeper implications for society at large and patient outcomes.

Then as to China and volume-based procurement. I think the key point here is that the Chinese government there, they're working on a long-term plan, 2030 plan, where they want to deliver improved health care for their population. And of course, they want to do that in a way which is also affordable from a government point of view. And so it's a long-term plan in a fairly stable political setting. And that gives us, of course, a predictable situation to work under and that's where we are part of that solution in terms of delivering new products to the Chinese health care market. So right now, we are investing in the market because we believe in the growth opportunity in the long run. So we're investing both behind Victoza, behind Tresiba and Ryzodeg. So for us, this is a growth story. And yes, then as in other markets, there will be tender-based situations occurring over time. But this is basically older legacy products, which are being exposed to competition. And our overall strategy is, of course, to pursue an innovation-based strategy to the benefits of patients and shareholders.

So with that, Martin, over to SOUL and SELECT?

Yes. Thank you very much. As you know, with any given outcome story, the timing is sort of dependent on, first, our ability to recruit. And second, then the accrual of events, so basically, the event rates. I'm obviously super pleased to say that both SOUL and SELECT have finalized their recruitment as per plan during Q1 of this year, not being delayed or significantly impacted by COVID-19. In terms of them moving forward, we are now basically dependent on the event rate. We have interposed trial put assumptions. And so far, the assumptions are seeming to hold more or less true. And therefore, we expect SOUL and SELECT to complete as previously discussed. In terms of readouts, we don't look into efficacy safety readouts. We obviously have a DMC to monitor both trials. But we do look into, obviously, if patients stay in the trial and stay on treatment, and there, those numbers look good and comforting, also speaking, obviously, to an acceptance of an oral offering.

To your second question, we are developing the high doses of oral semaglutide from an efficacy, but obviously, also from a safety perspective, match the higher doses of subcutaneous semaglutide.

The next question comes from the line of Peter Welford from Jefferies.

I'll just ask two. Just firstly, just with regards to your comments on the underlying growth. I think you commented that the underlying rate was around 9% because there was a 5% delta to the 14% ex the COVID stocking. I wonder if you could just outline for us or break down that 5%, if possible. I think you mentioned that Ozempic was obviously a part of it. But if you give us any sort of split of that 5%, it would be very helpful. And then just curious when we think about Ozempic, the new high dose for launching. Should we think, again, will there be any need for any additional forms or formulations of that? Or would it be based on existing cartridges and formulations? And how should we think about that with regards to positioning? Will it be very much dose intensification for existing patients? Or do you also think there's an opportunity to grab some market share from competitors with that new form?

Finally, then the second question, just with regards to the 50mg oral sema again. Just help us think about how we handicap that study. Can you just talk a little bit about PK based on sort of all absorption and what you know about where sort of oral 50 mg sits versus injectable formulation of Ozempic? And how we should, therefore, think about potentially where we could get to in that study at the end?

Thank you for that set of questions. So if I start out explaining the underlying 9% and then Camilla, if you talk to the high dose, and the 50-milligram positioning versus the injectable semaglutide 2.4 mg.

So on the 9% and the 5% adjustment related to current year, I think the way you should think about it is that IO growth of 9% when we adjust for stocking -- sorry, for shipment and tender timing, then we are looking at an IO growth just a notch higher than 10%. And then the remainder of the 5% is related to U.S. wholesaler stocking, of which, I would say, to the tune of half or so is related to the Ozempic 3-milligram pen presentation being launched.

Then Camilla, how do we position the semaglutide high dose vis-à-vis current treatments of diabetes?

Yes. So we know from our clinical trials from Ozempic that 8 out of 10 patients can get in good glucose control with a weight loss. So what -- the way we are thinking of high dose is that there are a few patients that over time, due to the progressive nature of diabetes, would need a higher dose, potentially, and can benefit from that. So that's how we basically see that patients can stay on a GLP-1 for a longer time, and with that, keep the benefits in both in terms of glucose control and also blood sugar control. And with Ozempic, we also have a proven cardiovascular profile. So this is how we see the benefits of high dose.

Then you had a question also on 50-milligram positioning in -- so oral obesity versus injectable 2.4. Here, it's important to mention that we know today that approximately only 1/4 of the primary care physicians that are approached with patients with obesity are referring those to specialists. And some of -- and that means that there is a big potential for those primary care physicians to themselves treat people with obesity. But some of those are also reluctant to treat with an injectable therapy. So the way we think about a high-dose product with potentially the same efficacy as 2.4 is that there is a bigger group of physicians that will be able to treat obesity at the first instance where they meet the patients. So this is a way for us to make sure that we can tap into a bigger group of physicians. And with that, make sure that we can provide the benefits of semaglutide to even more people with -- living with obesity.

Sorry, if we think about the PK -- sorry, can you help us put the 50 mg oral -- from a sort of clinical perspective, how should we think about 50 mg in terms of the PK versus the injectable formulation of Ozempic?

Absolutely. It's basically the same thing that we're looking at the high doses of semaglutide, both oral and subcutaneous as we did when we had to compare Ozempic and Rybelsus. So from a regulatory perspective, of course, we -- you're absolutely right. There's a little more variability. The confidence interval for the oral formulation is a little broader. But given everything we've seen so far also for the 50 milligram, the confidence interval. And obviously, the mean is making 50-milligram comparable to approximately 2.0, 2.4 milligrams of subcutaneous.

The next question comes from the line of Simon Mather from Exane BNP.

Yes. Just a couple of questions and just a follow-up on the 50-milligram oral sema. Just obviously, a strong start to the year. Maybe we can touch a bit on Rybelsus. I appreciate yesterday, you discussed the stocking that we had in Q4 and also the rebate reversal, which flattened Q4. So therefore, Q1 probably wasn't as weak as maybe it was perceived yesterday. But could you maybe just talk to your levels of confidence for the remainder of the year? Appreciate it's third launch of this products. You've had DTC now going for quite some time. Just wondered if you could maybe share some real-world compliance and whether we can finally put to bed this whole concept that patients wouldn't like the drug because they have to wait until they can eat. And with all of this, therefore, your confidence of achieving current consensus estimates of DKK 6.6 billion for this year would be helpful.

Secondly, just a follow-up to yesterday, one of the questions. Can you 100% rule out that the refusal to file for sema 2.0 has absolutely no bearing whatsoever on 2.4. Obviously, the PDUFA is 4th of June. I'm just wondering if you can help us understand why it would have no bearing if they're manufactured in different facilities or if they're in the same, and therefore, just help us a bit more comfort on that would be helpful.

And then just a final one on the 50-milligram dose. I guess put simpler, what weight loss does your internal modeling suggest you could achieve with a 50-milligram of sema? And to that point, clearly, your injectable sema programs now are all on 2.4 milligram dose. I'm just wondering if there's ever maybe a change in your stance with respect to oral sema for Alzheimer's. I think you're going for a 40 mg dose, why not go for a 50-milligram dose?

Great. Thank you, Simon. I lost count of the number of questions. So hopefully, we'll capture them all. But the first one for you, Camilla, on Rybelsus and what makes us confident that we have such a great product and launch trajectory.

Then Martin, refusal to file 2.0 versus 2.4. And then outcome of the 50-milligram dose and spillover opportunities vis-a-vis Alzheimer's.

So Camilla, if you start off?

Yes. So we remain very confident in Rybelsus because despite 2 lockdowns, we now see that prescriptions volumes have increased approximately 20% from Q4 to Q1 and we also see market share steadily increasing. So despite the ups and downs on NBRx, we see a very strong and steady TRx trend. This is, of course, based on the fact that both the number of prescribers and the number of scripts per prescriber is also steadily increasing. And now when we have reps back in the field in the U.S., we see that we are back to a very strong trajectory on that. We also can confirm that the positioning, meaning that 80% of the scripts are coming from outside GLP-1 that continues the same way as we have communicated before. So and now with real-world evidence, we are also able to see that those data look good. We haven't published yet, but we expect to be able to do that soon. So all in all, we remain very confident in Rybelsus and we continue to track on a very good trajectory despite the lockdown.

Perfect. Thank you, Camilla. And then Martin, over to you.

So first on the refusal to file. I can't go too much into an ongoing regulatory review. But obviously, the 2.0 milligram for diabetes versus the 2.4 milligram for obesity are 2 independent files, and we have no indication that the data requested from 2.0 milligram in diabetes would spill over or impact the 2.4 milligram assessment in obesity at this point.

On the Alzheimer's disease, this was specifically discussed from an efficacy but also from a safety perspective. Every data point that we have at this point, has been generated with diabetes doses. So the output would be comparable to 7 and 14-milligram of Rybelsus. These have proven to be very efficacious in establishing the proof of concept. And at the same time, very clear advice from the neurologists that have guided to us in this that in a fragile population, being careful not inducing to higher by weight loss. And obviously going to the higher doses, higher weight loss would be expected. So on the balance of efficacy versus safety, we do believe, together with the regulatory authorities that the diabetes level 7, 14-milligram dose are the correct to choose.

Yes -- sorry, just to -- yes, sorry, the weight loss. Apologies, yes. What was that?

For the 50-milligram -- expected weight loss for the 50 milligram?

The expected weight for the 50-milligram will be comparable to the weight loss that we have observed for 2.4 milligram of subcutaneous semaglutide.

Thank you, Simon. Thank you, Martin, and we've been talking a lot about trends. And I think if we could change the trend in terms of questions, back to 2 questions per person, then I think we can allow more to get to.

The next question comes from the line of Naresh Chouhan from Intron Health.

Just on the GLP-1 market shares, please. On Slide 7, you show a drop-off in market share for the total Novo Nordisk GLP-1 franchise, which seems to have been lost to Trulicity. So 2 questions on this. One, can you help us understand what's caused that? And two, more importantly, does this signal a more competitive pricing environment amongst the more efficacious GLP-1? Obviously, we've seen it at the lower end, but we haven't seen that between Ozempic and Trulicity. And obviously, with the upcoming launch of tirzepatide and the 2.0 mg, just a sort of sense on what's happening on pricing would be really helpful in the U.S.

Right. Camilla, GLP-1 market shares between Ozempic and Trulicity?

Yes. So in the beginning of the year, we saw Trulicity launching their high dose, and you see a small increase in their NBRx share in the beginning of the year. But most recently, you see also that gap narrowing a bit again. What's important for us is that the continued class growth is around 20% in the market. And that means that there is, you can say, a continued innovation in this segment. That also means that the fact that today, only around 8% of people are being treated with GLP-1 is likely to increase when this market is expanded by more than one, you can say, company in the area. What is important for us is, therefore, that we continue to innovate in the segment. And of course, with Ozempic, we see a continued high share of growth in the class on an MAT basis. So this, of course, is important for us, and we are also planning for launching a high dose later on, as we discussed earlier on in this call. So that's primarily what is the -- what's around the market shares in the GLP-1 segment in the U.S.

Thank you, Camilla. And as surprising, in reality, nothing new to report. We have a high degree of market access, more than 90%. And when you look at the volume value spread which has been a favorite, and it's similar to what we saw last year. So no changes in dynamics.

Next question comes from the line of Michael Leuchten from UBS.

Two questions, please. One, Karsten, just going back to the dynamics around the guidance increase on this time of the year. Thank you for the moving parts. But you haven't narrowed the corridor, it remains wider than it normally is. If you have had more confidence around health care reform and COVID dynamic, why did you not narrow it? So that's question number one.

And then question #2 for Martin. Just going back to the heart failure trials that you started. Just interested in your thoughts around timing here. There are incremental data points in the near-term future around other modalities in heart failure with preserved ejection fraction. You're kicking off trials now, which maybe had you waited a little bit longer might have given you a little bit more insight into this patient population when you yesterday pointed out we don't really have a lot of treatment options. So I wondered if you could talk a little bit about the decision to launch now as opposed to maybe wait for another few data points.

Right. Thank you, Michael. So I'll take the first on guidance, and Martin, if you take the heart failure question.

So Michael, I think it's a classic discussion on the breadth of the ranges. When we evaluate it, then basically what we looked at was, again, the strong Q1 performance and the risk picture for the remainder of the year and -- which indicated that the midpoint of our range would be higher. So that's what made us increase both the floor and the top range of the guidance range. So this was a clear reflection of a stronger performing business and also at lower risk level. Then you can always kind of theoreticize around the breadth of the range. But fundamentally, it's stronger underlying performance and lower risk that led us to this guidance, which is anyways not unusually broad if you compare to some of other companies in the sector.

So Martin on HFpEF?

Absolutely. So as you also mentioned, HFpEF is a hugely underserved population. As we speak, more than 20 million, 25 million patients suffering from this. 80% of them are also suffering from obesity. And it has been shown that weight loss can improve the functionality of the patient, so to speak, they improve their everyday activity, improve quality of life, improve their stamina and obviously, moving into the obesity space hopefully soon, launching 2.4 milligram of semaglutide, it makes sense for us to explore broader how we can help also in obesity-related comorbidities, HFpEF being one. But obviously, we are also looking at peripheral artery disease, we're looking at osteoarthritis. And we are looking at, broadly speaking, in the SELECT trial at cardiovascular disease.

Next question comes from the line of Wimal Kapadia from Bernstein.

Wimal Kapadia from Bernstein. I'll just come back to the China, please, and how you're thinking about the GLP-1 outlook in the country. So how far can the costs actually go? Should we be thinking about a penetration level that's similar to the U.S. over the long-term in terms of total diabetes volumes? Or is there a structural reason why the longer term, it could be lower than the U.S. levels? And then just tied to that, how do you think about the growth in China more broadly versus the rest of IO moving forward? Is it actually accretive or dilutive to the region?

And then my second question is just a bigger picture question on semaglutide. And you're clearly investing quite heavily in the molecule across various metabolic indications. I'm just curious how you think about the concentration risk longer term? You're reformulating the oral, so I can assume IP will be extended. But how do you think about the injectable product longer term? What is the company doing to ensure that IP risk is moderated longer-term given you're investing quite heavily?

So on the first one. The GLP-1 opportunity in China, I'll hand to you, Camilla. And then R&D strategy and concentration risk, I think that's a key one for you, Martin, its core R&D strategy. So Camilla, GLP-1 opportunity in China?

Yes. So in China, we are only just embarking on the GLP-1 opportunity as we are basically at 1% of the total diabetes market. As you know, in U.S. and in Europe, we are more to around 10-ish percent of the total market. So it means that in China, there is no difference in terms of unmet need. On the contrary, many people in China would also potentially benefit from the GLP-1 treatment. However, in terms of regulatory approval, we only had Victoza approved not that many years ago. And for a number of years, it was unreimbursed. Now we are in a different situation with having Victoza reimbursed, and we see a growth this quarter to the tune of close to at least above 85% in that segment so primarily driven only by Victoza.

And now last month, we had Ozempic approved in China. So whereas, of course, we would need to go through the usual processes in China with bidding reimbursement and so on, there's still a very big unmet need and opportunity to get to the level of where we are in Europe and in the U.S. on GLP-1 in China.

Great. Thank you, Camilla. And Martin, on concentration risk?

Yes. So obviously, as we said, we are investing in the semaglutide molecule, maximizing the value both for the patients but obviously also the broader value of the semaglutide molecule. We are cognizant of the patent life. And obviously, we are looking into a pipeline now that moves beyond semaglutide, both within diabetes and obesity, but also broadly in our disease areas, securing that we are in a good place also from an IP perspective, following the runout of the semaglutide patent.

Great. Thank you, Martin. And then to the second piece of your commercial question vis-à-vis the importance of China. And I would say when I look at our P&L here in the first quarter, then -- and you saw the 16% spend increase on S&D. Part of that I said was Rybelsus, but another part is investment in China. And growth in our innovative product portfolio, be that Victoza, Ryzodeg, Tresiba and then what we don't have in China -- in the Chinese market at this point is both our obesity franchise. It's Rybelsus. And we are kind of, relatively speaking, underutilized on our biopharm portfolio, where we're also investing quite a bit these days. So China is a key growth driver for the company for many years to come. As to the relative growth versus IO, we're not guiding down to specific regions. But as you see, this quarter, actually, China is accretive to growth for IO.

Next question comes from the line of Richard Vosser from JPMorgan.

So just going on other regions for Ozempic in Rybelsus in international operations. How do you balance the launch of the 2 brands over the next 3 years? Perhaps you could talk about the geographic expansion opportunities you have with those, the opportunities to increase penetration in a similar way to you talked about in China. It seemed like a very strong start for Ozempic. I know there was some maybe tender timings or shipment timings, but it seems a strong start. So talk about the growth there.

And then secondly, coming back to VBP in China. So human insulin has been competing on the EDL for a number of years with local players. And I think it's been sort of relatively flat and stable over that time. So maybe you could talk about the dynamics there and how you think about those dynamics and whether that's a good corollary for VBP for other insulins in China?

Thank you, Richard. So Camilla, if you'll talk to kind of the global rollout of Rybelsus and Ozempic and how we think about that in rest of world and the opportunity there. And perhaps also a little bit of color from it because you had experience on human insulin in China, while you're there. So just kind of the competitive pressure and how we dealt with the with the local manufacturers and the competitive pricing already in human insulin.

Yes. Thank you. So basically, the dynamics in terms of the balance of the brands, Rybelsus and Ozempic is quite similar across the world. It basically means that in most countries of the world, 2/3 of the potential is in the oral segment. So with our launch of Rybelsus, we are entering into that segment to a primary care physician audience also that traditionally have preferred an oral compound. So of course, in some markets, this opportunity is extraordinarily big, like in Japan that I believe you were referring to. And in Japan, 80% of the potential is basically in the oral segment. Here, also primary care physicians have traditionally not prescribed injectables. So we have not engaged with those in the past. That's why we have teamed up with a partner in Japan MSD to help us promote. But in other countries, there is -- like in the U.S., there is more of a happy of primary care physicians also prescribing injectables and where we have had bigger tradition of getting engaged with those. So depending a little bit on the exact size of the segments per market, we do position Rybelsus in the oral segment, clearly, and of course, Ozempic in the injectable segment. So with -- in terms of resources and so on, we also try to resource it in a competitive way across both segments so that we can compete in both.

When it comes to increasing our penetration geographically, we are basically rolling out Rybelsus and Ozempic. In most countries it takes a little while, but we are progressing. And with Rybelsus, we are now in 17 countries, and with Ozempic in 58 countries by now. So that's progressing quite fast. Then when it comes to China and human insulin, it's clear that there are a number of providers in the Chinese market with human insulin. There's traditionally been quite a fierce competition in that segment. And of course, we try to understand exactly what are driving the dynamics and also how we should compete. But as Karsten just said, we are primarily focused on upgrading to new and innovative medication in China but there can be, of course, areas and lower-tier segments where it's mainly human insulin that is reimbursed in some parts of China. And here, of course, we look into that particular local opportunity. But in general, we are focused on innovation and upgrading the markets to new and better treatments.

Thank you, Camilla. Thank you, Richard. This was unfortunately the last question we had time for today. So thank you for the interest in Novo Nordisk and attending our Q1 results meeting. As you saw then, we're delivering on our strategic aspirations on all 4 quadrants and delivered particularly strong first quarter with the adjusted 9% sales growth, and as a consequence, increased our full year guidance outlook for the first time in more than 10 years. So looking forward to see you. I'll connect with you in the next quarter in August. Thank you. Bye-bye.

This concludes our conference call. Thank you all for attending. You may now disconnect your lines.