One of the world's largest insulin makers is getting clobbered after issuing a warning about its prospects

It hasn’t been a good morning for the pharmaceutical industry.

As company earnings come out, stocks have been dropping across the supply chain.

Novo Nordisk, a Danish pharmaceutical company known for its diabetes medication was down 14% Friday morning after slashing its long-term profit growth target in half.

“The competitive environment in the U.S. within both diabetes care and biopharmaceuticals has become more challenging, negatively impacting the price of our products, especially for insulin and human growth hormone products,” Novo’s chief financial officer Jesper Brandgaard said in a call with investors Friday.

In the last decade, Novo’s list prices for its insulin have gone up roughly 300%. The company also introduced a new insulin in 2015 called Tresiba.

But the pharmacy benefits managers — who manage relationships between drugmakers, insurers and pharmacies — have been taking an increasing cut of drug prices. Drugmakers pay the PBMs a “rebate” to offset price increases, and for insulin, this has been rising, according to ZS Associates, a sales and marketing firm that works in the healthcare industry.

ZS data shows that Novo’s rebate rates were 47% in 2014, and 55% in 2015. Across the industry, ZS data shows that rebates paid out to PBMs and insurers have gone up from about $40 billion four years ago to $100-$130 billion by 2016. So while list prices continue to go up, net prices to the drugmakers have stayed mostly flat.

“If you want a little more money, you’ve got to increase the list price by a lot,” ZS principal Pratap Khedkar told Business Insider earlier in October.

Sanofi, which also reported earnings Friday and also makes insulin, has been facing similar issues for a few years. The company hasn’t taken any price increases on its insulin, called Lantus, since 2014. Sanofi was up 4% Friday morning.

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