Novo Nordisk tweaks outlook higher after pandemic sales hit

COPENHAGEN: Diabetes drug maker Novo Nordisk raised its full-year earnings outlook slightly on Thursday as it managed to offset stagnant sales with cost cuts during the coronavirus crisis.

The Danish company, whose shares rose 1pc, said second quarter sales were hit by fewer patients starting treatments as well as coronavirus-related destocking, after its first quarter was boosted by a surge in demand for medicines.

"Despite COVID-19, we are satisfied by the performance in the first half of 2020 and by the progress made on our strategic aspirations," CEO Lars Fruergaard Jorgensen said in a statement.

Novo said it now expects annual operating profit growth in the range of 2pc-5pc, up from an earlier estimate of 1pc-5pc growth.

Novo's operating profit was 13.8 billion Danish crowns ($2.19 billion), compared to an average 13.31 billion expected by analysts.

This was helped by lower costs, chief financial officer Karsten Munk Knudsen told reporters, which were achieved through less travel and promotional expenses, netting Novo savings of around 1 billion crowns. But Knudsen said reversals of bulked up inventories, worth 2 billion crowns, would continue into 2021.

At 30 billion crowns, Novo's sales were flat compared to the same period last year and were below analyst estimates of 30.7 billion crowns. They dropped from 33.9 billion reported for the first quarter of 2020.

Sales in the US, Novo's largest single market, grew 1pc compared to 12pc in the rest of the world. Novo hopes to gradually replace its US insulin business with its new GLP-1 diabetes drugs, which imitate an intestinal hormone that stimulates the production of insulin.

"The weight of US insulin becomes smaller and smaller in our business, so gradually we'll also expect to get back to growth in the US" Jorgensen said.

Sales of GLP-1 products in the first half of 2020 rose by 30pc globally, while insulin sales slid 3pc.