Novo Nordisk Profit Jumps 29% but Earnings Growth Likely to Slow
October 29 2015 - 9:40AM
Dow Jones News
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 09:25 ET (13:25 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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