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Denmark based Novo Nordisk (NVO - Analyst Report) recently announced that it has received approval in Japan for its diabetes treatment, Ryzodeg (insulin degludec/insulin aspart).
 
Ryzodeg was submitted for regulatory approval to the Japanese Ministry of Health, Labour and Welfare in March 2012. 
 
Ryzodeg is a soluble formulation of Tresiba (insulin degludec) and NovoRapid (insulin aspart – known as NovoLog in the US). 
 
Studies supporting the new drug application revealed that Ryzodeg demonstrated a significantly lower risk of nocturnal hypoglycaemia while successfully achieving equivalent reductions in HbA1c vis-à-vis NovoMix. 
 
We note that Tresiba, which is currently under regulatory review in the EU and the US, was approved in Japan in September 2012. Both Tresiba and Ryzodeg received positive opinions from the Committee for Medicinal Products for Human Use (CHMP) in the EU in October 2012.  Subsequently, the candidates received a positive vote for approval from an FDA Advisory Committee. 
 
Additionally, Novo Nordisk has submitted applications for regulatory approval in Canada, Switzerland and a range of other countries.
 
On a preliminary basis, Novo Nordisk expects a positive contribution from Tresiba to the top line in 2013, primarily in the US, EU and Japan, partially offset by a challenging operating environment in major markets. However, operating costs will grow considerably in the fourth quarter of 2012 due to significant costs related to the expected launch of Tresiba, expanded sales force in the US along with sales and marketing investments in China and other international operations.  
 
We are pleased with the company’s efforts to strengthen its presence in the diabetes market. The approval of Tresiba in Japan and the potential approval of both Tresiba and Ryzodeg in the EU and the US will together drive the company forward in bringing a new generation of insulin in the market. 
 
Meanwhile, Novo Nordisk recently completed a phase IIIa study on IDegLira, which is a combination of Tresiba and Victoza (liraglutide). Novo Nordisk is evaluating IDegLira for the treatment of patients suffering from type II diabetes.
 
Although well placed in the diabetes market, Novo Nordisk faces competition from other big players like Sanofi (SNY - Analyst Report), Eli Lilly and Company (LLY - Analyst Report) and Merck & Co.(MRK - Analyst Report).
 
We currently maintain a Neutral recommendation on Novo Nordisk. In the short run, the stock carries a Zacks #2 Rank (Buy). Other pharma stocks with a Zacks #2 Rank are Sanofi (SNY - Analyst Report) and AstraZeneca (AZN).

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