UPDATE 4-Novo pulls drugs from Greece over price cuts

* World’s biggest insulin maker rejects Greek drug price cut

* Refuses to sell modern insulins at 25 pct discount

* CEO sees cuts spreading to other markets

* LEO Pharma says will withdraw some products

* Novo shares down 0.3 pct

(Adds comment from GlaxoSmithKline, background on price plans)

By Anna Ringstrom

COPENHAGEN, May 31 (BestGrowthStock) – Novo Nordisk A/S (NOVOb.CO: )
pulled some of its insulin drugs off the Greek market after an
Athens order for drugmakers to slash prices, saying it fears
such cuts could spread to larger markets.

Lars Rebien, chief executive of the world’s biggest diabetes
care firm, said on Monday the Greek government’s order that it
should cut some prices by 25 percent was “unacceptable”.

Drug prices are in the firing line as European governments
seek to tackle budget deficits and Greece has ordered the
steepest cuts, leading drugmakers to worry they could be forced
into making similar reductions in other markets. [ID:nLDE64G20F]

Denmark-based Novo is the first drugmaker to pull drugs off
the Greek market due to pricing in the debt crisis, but was
followed by dermatology and critical care drugmaker LEO Pharma
which said it would also withdraw some products from Greece.

Sorensen said he is in talks with the Greek government,
which has ordered a 25 percent cut in the price of the Danish
firm’s insulins.

“What they propose right now is not acceptable … It will
have a rub-off effect on the European price level and it has an
effect on other markets outside Europe where the Greek prices
are used as a reference price in negotiations with governments,”
Sorensen told Reuters.

The company told the Greek government it will not lower the
prices of its most recent insulin products, so-called modern
insulins, and insulin products for use with pen injection
systems. As a result wholesalers have stopped ordering these
products as they would have to sell them at a loss, Novo said.

Sorensen said Novo’s modern insulins would run short in
Greece within a few weeks.

The new Greek regulations will result in a weighted average
price reduction of 21.5 percent, with bands of cuts ranging from
3 percent for products with a wholesale value of 1 to 5 euros,
to up to 27 percent for drugs priced above 100 euros.

SHORTAGE OF MEDICINES

Legal counsel for the Hellenic Association of Pharmaceutical
Companies, which represents local and international
manufacturers, had warned that Greece’s drastic price cuts could
lead to a shortage of medicines. [ID:nLDE6440D5]

Europe’s largest drugmaker GlaxoSmithKline Plc (GSK.L: ) said
it would continue to supply its medicines to Greece, while
AstraZeneca Plc (AZN.L: ) said it had no plans to withdraw
medicines from the Greek market.

But AstraZeneca said it was concerned about the cuts, which
it said appeared to contravene Greek law, and was working
through industry bodies “to engage with the Greek government in
an effort to reverse this latest policy”.

Novo spokesman Mike Rulis said in an e-mail statement a 25
percent price cut did not allow Novo to run a sustainable
business in Greece, a relatively small market for the company.

Such a cut also would bring prices in Greece “way below what
other European countries are paying”, Rulis added.

Novo will continue supplying human insulin products at the
reduced prices set by the Greek government to ensure people with
diabetes are not without access to insulin treatment.

Shares in Novo were down 0.4 percent at 465.70 Danish crowns
at 1408 GMT, while the STOXX Europe 600 healthcare index (.SXDP: )
was up 0.6 percent.

“As prices in Greece are used as reference prices by other
countries both inside and outside Europe, this reduction in
Greece would trigger similar reductions in these countries,
which would have serious financial consequences,” Rulis said.

This view was echoed by privately-held LEO Pharma, which
said the planned price cuts would have severe consequences for
its business, including investment in research and development.

“We risk that prices in for example Spain, Portugal, Italy,
Romania, Turkey, Czech, Hungary … will also be subject to
severe reductions if we do not act,” Leo said in a statement.

Germany and Spain have also announced plans to reduce drug
prices and cuts are expected in Portugal and Italy.
[ID:nLDE6440D5] [ID:nLDE62P0XP]

Sorensen said Greece is the only market from which Novo has
decided to withdraw its modern insulins due to the price cuts
but did not rule out similar moves in other countries.

He said he did not expect a significant earnings effect for
Novo this year from price reforms in Europe, echoing Chief
Financial Officer Jesper Brandgaard who said last week he was
more concerned by longer-term implications for the overall price
levels in Europe. [ID:nLDE64P12F]

Investment Analysis

(Additional reporting by John Acher, with Kate Kelland and Ben
Hirschler in London; Editing by Hans Peters and David Holmes)

UPDATE 4-Novo pulls drugs from Greece over price cuts