Novo Nordisk 1Q Beat Expectations; Cautions on Competition, Pricing

Danish pharmaceutical company Novo Nordisk A/S (NOVO-B.KO) on Wednesday posted first-quarter earnings that beat forecasts, but it cautioned that despite expecting robust sales growth in the future, intensifying competition and price pressure will have an effect.

Net profit for the three months ended Mar. 31 rose to 10.75 billion Danish kroner ($1.74 billion) from DKK10.16 billion in the same period last year, beating the DKK9.87 billion forecast in a FactSet poll of analysts. Sales fell to DKK26.93 billion from DKK28.45 billion, but still beat the expected DKK26.72 billion.

Sales in the quarter found support from Novo Nordisk’s new diabetes and obesity treatments, partly offset by declining sales of long-acting insulin Levemir. However, a significant hit from the depreciation of the U.S. dollar and related currencies versus the Danish krone meant that reported sales fell.

Measured in local currencies, 2018 sales growth is now seen at 3% to 5% compared with an earlier estimate of 2% to 5%. Reported sales growth is now expected to be around six percentage points below that range, having earlier been anticipated at seven percentage points lower.

Operating-profit growth in local currencies is now seen at 2% to 5% from a previous estimate of 1% to 5%, with reported growth seen around nine percentage points lower, from a drop of 10 percentage points expected earlier.

Growth this year is expected to be underpinned by a robust performance in Novo Nordisk’s modern insulin and obesity drugs, but the company said intensifying global competition both within diabetes care and biopharmaceuticals, as well as continued pricing pressure within U.S. diabetes care, would keep a lid on growth.

Looking into next year, Novo Nordisk said new U.S. legislation will hit group sales by 1% to 2%. Funding of the Medicare Part D coverage gap will be changed from 2019, with pharmaceutical companies required to cover 70% of the coverage gap compared with a current level of 50%, it said.

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