Novo Nordisk facing huge shareholder lawsuit from European investors

The lawsuit is being filed by shareholders from Novo’s home country of Denmark with the suit alleging that Novo Nordisk made misleading statements and did not make appropriate disclosures regarding its sales of insulin products in the USA. It has been noted that the lawsuit is similar to the one Novo Nordisk faced before back in 2017 from US holders of the companies American Depository Receipts (ADR’s)

The shareholders demand a huge payoff of around $1.75bn in compensation based on trading and shares held between February 2015 and February 2017. Novo Nordisk, in a letter, announced that it disagrees with these allegations ‘and is prepared to defend the company in this matter.’

The heart of the issues stems from the pricing pressures that the company has been facing for its insulin products in the US. With the shareholders arguing that Novo Nordisk was not transparent about the pricing pressure. A lawyer told Reuters that while the company reported that insulin sales increased from 2015-2017, rebates also sharply rose in this time period.

The US class action suit claim that Novo Nordisk ‘entered to an improper, collusive agreement to increase the prices of their insulin drugs, as evidenced by synchronized skyrocketing prices for the insulin products over the past decade.’ This is in reference to the pricing scandal that hit three of the biggest insulin producers ( Sanofi, Novo Nordisk and Eli Lilly) When the monthly wholesale price of Humulin, the most popular insulin used in type 2 patients, increased to nearly $1,100 between 2010 and 2015, up from $258.

The suit also claims that the company told investors that its profits would continue to increase significantly, even though competitors revealed that their insulin-related products would decline due to the increase in pricing pressures from pharmacy benefit managers.

Novo Nordisk could be in for a tough time as it tries to sort this issue out.

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