By Anna Molin

Denmark's Novo Nordisk A/S posted a 29% jump in third-quarter net profit, but warned that fierce pricing competition and the high launch costs of a diabetes treatment recently approved in the U.S. would more than halve the pace of earnings growth next year.

Third-quarter net profit rose to 8.38 billion Danish kroner ($1.24 billion) on net sales of 26.8 billion kroner, up 20% on the year.

Novo Nordisk, the world's largest insulin maker by volume, forecast mid-to-high single-digit growth in operating profit for 2016. That compares with the company's own forecast of an increase of roughly 20% in operating profit for this year.

The clouded outlook illustrates Novo Nordisk's challenge. While demand for medicines to treat diabetes is soaring--the disease affects nearly 400 million people world-wide, according to the International Diabetes Federation--competition is intensifying in its key U.S. and Chinese markets.

In the U.S., insurers and health-care providers are also putting pressure on pharmaceutical companies to offer discounts even for brand-new treatments, and presidential hopefuls, including Democratic candidate Hillary Clinton, have pledged to stamp out the "outrageous price gouging" of big pharmaceuticals.

French drug maker Sanofi earlier this year cut the price of its blockbuster insulin Lantus and the competitive landscape is hardening with a number of rivals launching new diabetes products this year and next.

Chief Executive Lars Rebien Sorensen said Novo Nordisk was counting on its new diabetes treatment, Tresiba, to take market share from Lantus.

In early 2016, the Danish company will launch a heavy promotion campaign with 2,000 sales representatives in the U.S. dedicated to selling Tresiba at a premium price to its predecessor, Levemir.

"We are not going to rebate heavily to get fast access to the U.S. market," the Danish CEO said.

Analysts questioned this strategy, saying insurers and health-care providers were likely to demand more data on Tresiba's benefits before agreeing to pay a higher price.

"This will be a tough fight," Alm. Brand analyst Michael Friis Jorgensen said.

Write to Anna Molin at anna.molin@wsj.com

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(END) Dow Jones Newswires

October 29, 2015 09:16 ET (13:16 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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