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Novo Quarterly Net Misses Estimates on Slowed Victoza Growth (1)

October 31, 2013

Novo Nordisk A/S (NOVOB), the world’s biggest insulin maker, reported third-quarter profit that missed analysts’ estimates on slower-than-expected growth of its Victoza diabetes treatment.

Third-quarter net income climbed 13 percent to 6.42 billion kroner ($1.18 billion) from 5.67 billion kroner a year earlier, the Bagsvaerd, Denmark-based company said in a statement today. That lagged behind the 6.55 billion-kroner average estimate of 16 analysts surveyed by Bloomberg. Novo said today it expects “high” single-digit percentage growth in sales and operating profit next year in local currencies.

“The combination of new diabetes products, the FDA safety review and the changing U.S. health-care dynamics brings the slowing Victoza growth into the limelight,” Johan Unnerus, an analyst at Swedbank AB (SWEDA) in Stockholm, wrote in an Oct. 25 note.

Revenue from Victoza, which mimics a hormone called GLP-1 and stimulates natural insulin production, climbed 14 percent to 2.85 billion kroner, missing the average analyst estimate of 3.03 billion kroner. Sales of its so-called modern insulins, including Levemir, climbed 5.8 percent to 9.39 billion kroner.

Novo recently lost a contract to provide insulin and Victoza to Express Scripts Holding Co. (ESRX:US), the largest U.S. processor of prescription drug claims. Studies also have linked Victoza and similar medicines to a higher risk of pancreatitis and pancreatic cancer. The U.S. Food and Drug Administration said in March it was reviewing unpublished findings by a group of researchers suggesting pre-cancerous cellular changes may be associated with Type 2 diabetes treatments known as incretin mimetics, including Victoza.

Sustain Growth

Until now, Victoza has helped Novo sustain growth following the rejection of its new insulin Tresiba in the U.S. earlier this year. The FDA demanded a new study to assess the heart risk of the product. Novo originally aimed for approval of the treatment in the world’s biggest drug market as early as 2012. It’s now targeting a U.S. introduction by 2016 or 2017. Novo said today it has started enrolling patients for the study, and expects data from an interim analysis of the trial to be available within two to three years.

The medicine, approved in the European Union, is already sold in Denmark, the U.K., Switzerland, Sweden, Mexico, Japan and India. Novo needs Tresiba to help it challenge Sanofi (SAN)’s top-selling Lantus insulin, which last year amassed 4.96 billion euros ($6.8 billion) in sales.

In August, Novo raised its sales and profit forecasts on higher revenue from Victoza and left the guidance unchanged today. Novo estimates full-year sales growth in local currencies of 11 percent to 13 percent.

Novo shares have returned 8.5 percent including reinvested dividends over the past year through yesterday, compared with a 26 percent return for the Bloomberg Europe Pharmaceutical Index.

To contact the reporter on this story: Albertina Torsoli in Geneva at

To contact the editor responsible for this story: Phil Serafino in Paris at

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