Novo Nordisk ( NVO ) reported first
quarter 2013 earnings of $1.94 per American Depository Receipt
(ADR), up 32.5% from the year-ago period. Revenues in the first
quarter of 2013 increased 14% in local currencies year over
All growth rates mentioned below are on a year-over-year and
local currency basis.
In the reported quarter, total revenues grew 14% driven by
strong sales in North America (up 24%) and International Operations
(up 17%). Key sales drivers were modern insulins and Victoza.
Geographically, North America was the largest contributor (68%
share of growth) to total revenues followed by International
Operations (19%), China (10%) and Europe (6%). Timing of shipments
in the US and International Operations had a positive impact on
Novo Nordisk's Diabetes Care segment recorded growth of 15%.
Modern insulins generated strong revenues (up 16%) driven by
NovoRapid (up 16%) and Levemir (19%). Novo Nordisk's key drug,
Victoza, is a once-daily human glucagon-like peptide 1 (GLP-1)
analogue approved for improving blood sugar (glucose) levels in
adult type II diabetes patients. The drug witnessed sales growth of
36%. Victoza witnessed growth in North America, Europe and
International Operations. Protein-related product sales were flat.
Oral antidiabetic product sales and human insulins sales were down
Sales in the Biopharmaceuticals segment of Novo Nordisk
increased 12%. Strong sales of Norditropin (up 18%), NovoSeven (up
7%) and other products (up 9%) contributed to the increase.
Modern insulins contributed 50% to total sales growth whereas
Victoza contributed 28%.
Novo Nordisk's research and development (R&D) costs and
sales and distribution costs increased 6% and 15%, respectively.
Novo Nordisk's efforts to develop its pipeline, primarily the
ongoing phase IIIa study on the once-weekly GLP-1 analogue
semaglutide and liraglutide in obesity, drove R&D expenses in
the reported quarter. Increase in sales and distribution cost was
primarily driven by the expansion of the US sales force and costs
for the launch of Tresiba in Europe and Japan.
In local currencies, operating profit is expected to grow 10%
despite including the impact of significant costs related to the
expected launch of Tresiba outside the US, investments in the
modern insulins portfolio and Victoza in the US, the expanded US
sales force as well as sales and marketing investments in
In local currencies, sales growth is expected to be in the range
of 9-11%, above the previous expectations of 8-11%. This guidance
is mainly driven by robust penetration of modern insulins, steady
Victoza growth and sales contribution from Tresiba. These positives
are expected to be partly offset by the challenging pricing
environment in major markets, generic competition for oral
anti-diabetic products, intensifying competition within Diabetes
Care as well as Biopharmaceuticals.
Novo Nordisk carries a Zacks Rank #3 (Hold). Currently,
companies like Catalyst Pharmaceutical Partners
Inc. ( CPRX ) and
UCB ( UCBJF ) look more
attractive with a Zacks Rank #1 (Strong Buy). AbbVie
Inc. ( ABBV ) is also well
positioned with a Zacks Rank #2 (Buy).ABBVIE INC (ABBV): Free Stock Analysis ReportCATALYST PHARMA (CPRX): Free Stock Analysis
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