The news that pharmacy-benefits manager Express Scripts is ditching the world's biggest diabetes-focused company came as a surprise. It will no longer use Novo Nordisk's Victoza, or any of its diabetes products, including insulin. The implications are threefold.
This is a clear blow for Novo Nordisk, as it will negatively affect sales of not only Victoza but also Novolog, and it may be hard for Novo to hit earnings guidance. It's also interesting that Express Scripts would go with a less premium product than Victoza -- it's an indication that it may be using its post-merger weight to negotiate better deals for branded products, given Victoza's popularity. Finally, this is a clear win for Eli Lilly, and it validates management's decision to become a diabetes powerhouse, even if a lot of its offerings are still in drug development.
In this video, health-care analyst David Williamson discusses what these events mean for investors in Novo Nordisk, Eli Lilly, and Express Scripts, along with the broader implications of this decision.
Follow David on Twitter: @MotleyDavid.