Novo Nordisk Records Growth in Net Profit

1 min read

The FINANCIAL — Drug maker Novo Nordisk A/S on April 30 raised its financial guidance for 2015 as it reported a strong rise in profit and announced that Chief Executive Lars Rebien Sorensen will remain at the helm until his contract expires in 2019, according to Nasdaq.

The decision to retain Mr. Rebien Sorensen and the announcement that Chief Operating Officer Kare Schultz is leaving the company came as a surprise to analysts, who had thought Mr. Schultz was in a position to become the new chief executive.

“But it’s positive to see that CEO Lars Rebien stays in office to 2019,” Jyske Bank said in a note.

The move comes as the board decided to elevate the leaders of the company’s U.S., European and international commercial activities and its product-supply operations to executive management to broaden the board’s perspective.

The world’s biggest insulin maker said it expects its reported operating profit to grow about 17% in local currencies this year. At the end of January, the company had said it expected operating profit to grow about 10% in local currencies.

A raised outlook for 2015 and strong quarterly earnings sent Novo Nordisk’s share price higher immediately after the open, but it subsequently fell around 2%, in line with the wider market.

Novo Nordisk reported a net profit of 9.88 billion Danish kroner ($1.47 billion) for the three months to the end of March, compared with DKK6.46 billion kroner in the same quarter last year.

Quarterly revenue rose 24% to DKK25.20 billion from DKK20.34 billion in the year-earlier period, driven by growing sales of diabetes drugs Levemir and Victoza.

North America, the world’s largest diabetes market, was the main contributor to sales growth. The Danish company is the market leader in the U.S., but faces intense competition from rivals, such as Sanofi (SNY) and Eli Lilly & Co. (LLY).

The company’s gross margin was 84.6% in the first quarter, compared with 83.0% in the same period last year. Currency effects boosted the company’s gross margin by 1.6 percentage points, whereas the underlying gross margin was unchanged.

For 2015, the company expects sales growth in local currencies of 7% to 9%, supported by a continued robust performance from its portfolio of insulin and a modest sales contribution from new launches, such as Saxenda.

The company said it expects these sales drivers to be partly countered by an impact from increased rebate levels in the U.S., intensifying competition within diabetes and biopharmaceuticals as well as macroeconomic conditions in a number of markets.


Leave a Reply