Fresenius (NYSE: FMS) stock was down 18% yesterday. The blow to FMS stock came not from anything the company itself had done but from something that Novo Nordisk had. The problem here being that Fresenius treats kidney failure - dialysis centres. But Novo Nordisk might now have a drug that prevents kidney failure and therefore the need for dialysis. This is great for patients, great for society at large and so on but something of a blow for Fresenius of course. For it is a blow if your business is treating a disease and someone comes along and cures that same disease.
The difficulty is in the basic structure of the Fresenius business: “Fresenius Medical Care AG & Co. KGaA provides dialysis and related services for individuals with renal diseases in Germany, North America, and internationally. The company offers dialysis treatment and related laboratory and diagnostic services through a network of outpatient dialysis clinics; materials, training, and patient support services comprising clinical monitoring, follow-up assistance, and arranging for delivery of the supplies to the patient’s residence; and dialysis services under contract to hospitals in the United States for the hospitalized end-stage renal disease (ESRD) patients and for patients suffering from acute kidney failure” That entire structure is based upon treating the symptoms of kidney failure.
Fresenius stock price from Google Finance
And here’s the problem that needs to be faced: “Novo Nordisk (NOVOb.CO) said on Tuesday it will stop a trial studying Ozempic to treat kidney failure in diabetes patients ahead of schedule because it was clear from an interim analysis that the treatment would succeed.” And in more detail: “Novo on Tuesday said it decided to stop its kidney outcomes trial FLOW on the advice of the study’s independent data monitoring committee. Semaglutide, which goes by the names Ozempic and Rybelsus in Type 2 diabetes, and Wegovy in obesity, hit certain pre-specified criteria to halt the trial early for efficacy, Novo said in a press release.” The full press release is here.
As we say, this is obviously great for Novo, for patients, for society as a whole. But it’s equally clearly not good for those businesses - like Fresenius - which treat kidney failure if there’s now a drug that prevents kidney failure.
