By Ben Hirschler

LONDON (Reuters) - Commercial rather than technical hurdles ultimately torpedoed Novo Nordisk's <NOVOb.CO> bid to make an oral form of insulin, its chief executive said on Wednesday, underscoring the impact of U.S. price pressure on the world's top insulin supplier.

An insulin pill, saving diabetics from daily injections, has long been seen as the "holy grail" of diabetes care, yet the Danish group announced last month it was throwing in the towel after several years of work.

"We actually made a phenomenal scientific achievement in demonstrating to ourselves it is possible to have an insulin tablet," Chief Executive Lars Rebien Sorensen told an industry conference.

"The problem is that in the reimbursement market we are now facing it is unlikely that such a tablet could be made available at a price that would be acceptable to the payers."

Novo's decision to scrap the insulin pill program came as the company slashed its long-term profit growth forecast due to falling U.S. insulin prices, sending its shares into a tailspin.

Delivering a protein like insulin as a pill is hard because it risks being destroyed in the stomach. Novo scientists overcame this obstacle to a degree but still needed to deliver around 50 times more insulin in a tablet than in an injection, to ensure a sufficient dose.

As a result, the insulin pill in development would have needed to cost far more than a standard injection.

While a big premium for convenience might have been commercially viable once in the lucrative U.S. market, it would not be viable today, given the squeeze on prices by pharmacy benefit managers, who administer drug programs for health plans.

Sorensen said the tablet concept, which is also being pursued by Israel's Oramed Pharmaceuticals <ORMP.O>, might yet be revisited by Novo if its scientists found a way to make a cheaper version needing less insulin.

The decision is part of a wider move by Novo to pull back from high-risk research with uncertain returns.

"We have amended our research strategy by discontinuing a number of projects that we assess are difficult to commercialize in an environment where there's focus on healthcare costs and payer pressure on us," Sorensen told Reuters, after addressing the Financial Times conference.

Sorensen, who will step down as CEO in six weeks after 16 years at the helm, has presided over Novo's rise to become the most valuable company in the Nordic region. But 2016 has been punishing final year, with the company's shares tumbling 42 percent amid growing U.S. pricing fears.

Despite the setback in oral insulin, Novo still has high hopes for another pill, this time an oral version of a GLP-1 class of medicine that stimulates insulin production in the pancreas.

Injectable forms of GLP-1, led by Novo's Victoza, are already well-established and a pill could allow them to be given to patients earlier and more widely.

Significantly, the amount of GLP-1 drug needed in a pill is not that much greater than in an injection, so Sorensen believes an oral version could be viable if priced around the same level as a GLP-1 injection.

If all goes well, an oral form of Novo's next-generation GLP-1 semaglutide could reach the market around 2020. Novo is investing $1.85 billion in a factory in Clayton, North Carolina that will make oral semaglutide and other products.

(Reporting by Ben Hirschler; Editing by Alexandra Hudson)