(Bloomberg) — Novo Nordisk ( ) needs to be prepared to take calculated business risks to win, CEO Mike Doustdar said, outlining the Ozempic maker’s strategy as it seeks to make up lost ground in the increasingly competitive obesity market.
Doustdar, the former head of international operations who took over as CEO in August, on Thursday announced the biggest deal in Novo’s history to boost its portfolio of experimental medicines. The company agreed to buy Akero Therapeutics Inc. for up to $5.2 billion to expand its pipeline into metabolic dysfunction-associated steatohepatitis (MASH), a liver disease linked to obesity.
The deal with Akero comes as Novo tries to catch up to Eli Lilly & Co. in the race for leadership in the obesity market. The disease, caused by excess fat in the liver, has been attracting a lot of business this year as companies look to take advantage of the overlap between MASH, obesity and type 2 diabetes.
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“We shouldn’t have the ‘not invented here syndrome’ and we need to be open to other people’s science,” Doustdar said in an interview. “We need to be aware of who else is out there, who may have invented something beyond what we could do.”
Compared to similarly sized competitors, the company has historically avoided transformative deals, Doustdar said. Instead, it did well by closely following its own strategy—with domestically developed drugs driving growth—and buying only assets or companies that fit that strategy.
But when Novo finds innovators who have developed something better than its own in-house assets, the company can’t “shy away from taking on some additional risks,” he said. In the case of Akero, Novo had earlier this year halted the development of its own internal medicine that acted in a similar way to the biotech compound.
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“If you always encounter a problem, we won’t eat any soup,” Doustdar said.
Novo had previously looked at Akero but felt it was not the right time for a deal, Doustdar explained. When he took over as CEO, his team evaluated several assets and determined that the biotech was “one of the ones that is really, really good right now.”
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