US-based Organon (NYSE: OGN) has released its financial results for the third quarter of 2023, showing a 1% year-on-year (YOY) decrease in sales to USD 1.519 billion in constant currency terms. The company’s performance was marked by a 7% decline in Women’s Health sales to USD 418 million, a 10% increase in Biosimilars to USD 142 million, a 3% rise in Established Brands to USD 935 million, and a significant 38% decrease in the Others category to USD 24 million.
Challenges and Product Performance
Organon faced several challenges impacting its Q3 performance, including a 23% YOY decrease for contraceptive NuvaRing due to generic competition and unfavorable discounts in the US market for other fertility products like Nexplanon. The launch of Organon’s Humira biosimilar in July has been slow as the product continues to establish itself in the market.
China Market and Economic Turbulence
The impact of volume-based procurement (VBP) tendering in China negatively affected the Established Brands unit, with China market sales down 2% in constant currency terms to USD 202 million. CEO Kevin Ali highlighted the challenging economic and policy environment in China during the earnings conference call, noting increased scrutiny on healthcare spending, stricter enforcement of VBP rules, and investigations into hospital-level prescribing patterns.
VBP Impact on Specific Products
Organon’s cardiovascular product Ezetrol/Zetia was part of Round 7 of the VBP, while Round 8 included Remeron and Hyzaar, implemented from July, resulting in a USD 30 million impact on China sales during Q3. CEO Ali revealed that the general economic downturn is impacting consumer spending and reducing sales in retail channels, which had previously helped Organon avoid the worst of the VBP impact.
Positive Outlook and Growth in China
Despite the challenges, Ali reported growth in China for the fourth quarter, with IVF cycles picking up after a slow Q3 due to recent Chinese government actions on healthcare practices. Organon also expects to benefit from a favorable comparison to COVID-impacted Q4 2022. The fertility business in China has remained a growth engine, with sales up 15% YOY. Ali expressed optimism that a more normal level of engagement in hospital and retail channels is expected by the beginning of next year.-Fineline Info & Tech
