Danish pharmaceutical company Novo Nordisk A/S (NOVO-B.KO) on Wednesday reported flat second-quarter net profit, but lifted its growth targets for the year on expectations of robust sales of its type-2 diabetes drug Victoza and long-acting insulin Tresiba.
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Sales in the quarter got a boost from sales of new diabetes and obesity drugs, but growth in North America was pegged back by adjustments to rebates and competition from generic drugs.
Sales growth in 2017 is now expected to be 1% to 3% measured in Danish kroner, improved from an earlier estimate of 0-3%, with reported growth seen around three percentage points lower.
Novo Nordisk said growth in operating profit is now expected to be 1% to 5% measured in Danish kroner, up from an earlier estimate of -1% to 3%. Reported growth is seen around 4 percentage points lower.
The difference between local currency and reported growth stems from the 8% depreciation of the U.S. dollar, and other currencies in which Novo Nordisk invoices its customers, against the euro and the Danish krone since the first quarter.
Novo Nordisk said talks with pharmacy benefit managers and managed-care organizations in the U.S. are progressing, though the company expects average prices after rebates to fall. Market access for its key products is expected to remain broadly unchanged though.
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"We are well on track to deliver on our targets for 2017 based on sales growth driven by our new, innovative products within diabetes and obesity care and a continued focus on cost control," said Chief Executive Lars Fruergaard Jorgensen. "Although the formulary negotiations in the U.S. reflect the tough competitive environment, we remain confident that our long-term financial growth targets are achievable."
Demand for its modern insulin and obesity drugs should underpin an improved performance at Novo Nordisk this year, though the company said that challenging trading conditions in the U.S.--including lower prices, generic products and intensifying competition--and adverse economic conditions in several international markets would keep a lid on growth.
Net profit little changed at 9.95 billion Danish kroner ($1.57 billion) in the three months to June 30 compared with DKK9.97 billion in the same period last year, beating analysts' expectations of DKK9.65 billion according to a FactSet poll. Sales rose to DKK28.64 billion from DKK27.46 billion.
-Write to Dominic Chopping at email@example.com; Twitter: @domchopping @WSJNordics
(END) Dow Jones Newswires
August 09, 2017 02:53 ET (06:53 GMT)