Novo Nordisk modern insulin growth slow

The world's biggest insulin producer raised full-year guidance following a rise in sales of modern insulin and diabetes treatment Victoza, but acknowledged that it faces a slowdown of modern insulin sales, which in the second quarter accounted for 43.6 percent of total group sales.

Novo Nordisk said it now expects full-year sales in local currencies to rise by 9 percent to 11 percent, up from an earlier forecast of 8-10 percent, and operating profits to rise 15-19 percent, up from an earlier forecast of around 15 percent.

Chief Financial Officer Jesper Brandgaard told Reuters he expected modern insulin sales growth to slow quarter by quarter from now and until a new product was launched.

"All else equal, when you launch a new product you will have a fall in growth rates quarter by quarter, and the only way we can get growth going again is by launching a new product," Brandgaard said. "We hope that degludec and degludec plus will come in and create new growth for our insulin in the United States," he said.

The company would "soon" file a registration application for degludec in the United States, he said. Once filed to the authorities, it could likely a year and 18 months for the drug to be launched.

"It is clear that degludec, if given a strong labelling...could become a big blockbuster," Brandgaard said.

A blockbuster is a drug with annual sales of more than $1 billion.

But Novo warned of intense generic competition in oral anti-diabetic products and challenges from healthcare reforms world-wide. Analysts said slower growth rates left the company vulnerable to delays in the launch of new drugs.

Swedbank analyst Johan Unnerus said: "We expect modern insulin growth to slow ahead of approvals for the next generation of insulin, which will probably be late next year with the approval of degludec." Degludec is an ultralong-acting insulin.

"It leaves Novo a bit more exposed to any negative news or delays of degludec approval as the company faces slower growth," Unnerus said. He said Sanofi-Aventis' competing drug Lantus had proven very successful.

Novo Nordisk's shares were up 1.2 percent at 615 crowns by 1132 GMT, down from earlier highs of 629 crowns.

The shares outperformed the European healthcare sector index which was up 0.3 percent and the Copenhagen bourse's bluechip index which rose 0.4 percent.

"The quarter is a bit weak. Eli Lilly has really significantly strengthened its insulin sales force and that puts pressure on Novo," said Alm. Brand Michael Jorgensen.

Second-quarter earnings before interest and tax (EBIT) rose to 5.27 billion Danish crowns ($1.01 billion) from 5.04 billion in the same quarter last year, slightly below analysts' average estimate of 5.34 billion.

Second-quarter sales rose to 16.0bn crowns, also slightly below a 16.57 billion forecast in the Reuters poll.

Sales of Victoza, a diabetes treatment that stimulates the body's own insulin production, rose 322 percent to 1.25 billion crowns, beating analysts' average 1.22 billion forecast.

Modern insulin sales rose by a modest 3 percent to 6.97 billion compared with the same quarter a year earlier but failed to meet analysts' average 7.30 billion forecast.

Reporting second-quarter earnings last week, rivals AstraZeneca , Britain's second-biggest drug-maker, and French rival Sanofi-Aventis both raised their 2011 earnings outlook despite modest sales growth.

Copyright Reuters, 2011