Shares in Novo Nordisk rose more than 3% on Wednesday after the Danish drug developer delivered a better-than-expected earnings outlook for 2022 despite missing fourth quarter operating profit expectations.
The world's largest diabetes drug developer expects to generate sales growth of between 6% and 10% in local currencies in 2022 and deliver operating profit growth of 4% to 8%.
"This reflects an underlying unchanged positive growth momentum for Novo Nordisk," Sydbank analyst Soren Lontoft told Reuters, adding that he would be raising his estimates.
Jefferies analysts said Novo's operating profit forecast reflected lower margin pressure than feared.
Novo reported fourth quarter operating profit of 13.63 billion Danish crowns ($2.06 billion), an increase of 16% over the corresponding period last year, but below an average of 14.36 billion forecast by analysts in a Refinitiv poll.
Higher sales and distribution costs in addition to higher research and development spending had impacted the results, Lontoft said.
"It reflects perhaps a more normalized world with increasing absence of restrictions and COVID-19, which has led to increased marketing spending," he added.
Sales for the fourth quarter, however, came in at 38.3 billion crowns, above analysts' estimates of 37.9 billion, driven by sales of new diabetes drug, Ozempic, which rose 64% to 33.7 billion in 2021.
OVERCOMING SUPPLY ISSUES
Novo was overwhelmed by the demand for its Wegovy obesity drug following its release to the U.S. market in June, leading to product shortages.
In December, a contract manufacturer halted deliveries and manufacturing temporarily after issues relating to good manufacturing practice
"Since December, we have worked hard to optimise our internal capacity," Chief Executive Lars Joergensen told reporters on Wednesday.
"Consequently, we now expect that internal capacity in the first half of 2022 will be close to the demand of around 20,000 weekly total scripts as seen in the U.S. market at the end of 2021," Joergensen added.
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