) reported fourth-quarter 2013 earnings of 41 cents per American
Depository Receipt (ADR) well above the Zacks Consensus Estimate
of 26 cents. Earnings also increased 8% from the year-ago period.
Fourth quarter revenues of $4.0 billion beat the Zacks Consensus
Estimate of $3.2 billion.
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All growth rates mentioned below are on a year-over-year and
local currency basis.
Total revenue grew 10% driven by strong sales in North America
(up 12%), China (15%) and International Operations (up 22%).
Strong sales of Victoza, other diabetes care products and modern
insulins like NovoMix, NovoRapid and Levemir contributed to the
impressive performance during the quarter.
Novo Nordisk's Diabetes Care segment recorded sales growth of
10%. Modern insulins generated strong revenues (up 14%) driven by
NovoRapid (up 10%), NovoMix (up 9%) and Levemir (24%). 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 25%, primarily driven by strong growth
in North America, China and International Operations.
Geographically, North America was the largest contributor to
Sales in Novo Nordisk's Biopharmaceuticals segment increased 11%.
Strong sales of Norditropin (up 26%) and other products (up 23%)
contributed to the increase.
Novo Nordisk's research and development (R&D) costs,
administration costs and sales and distribution costs increased
14%, 10% and 11%, respectively. Novo Nordisk's efforts to develop
its pipeline within the Diabetes Care and Biopharmaceuticals
segments increased R&D expenses during the reported quarter.
Sales and distribution costs increased primarily due to the
expansion of the U.S. and Chinese sales forces. Sales and
distribution costs were also driven by sales and marketing
investments in the U.S., China and a few countries under
International Operations. Administration costs increased on
higher back office infrastructure costs.
Novo Nordisk reported full year 2013 earnings of $1.67 per ADR,
missing the Zacks Consensus Estimate of $1.73. Earnings were
however well above the year-ago figure of $1.33.
Full year revenues increased 12% to $14.9 billion. Revenues were
however below the Zacks Consensus Estimate of $15.4 billion.
Last month, the company's congenital FXIII deficiency treatment,
Tretten, was approved in the U.S. The news came as a huge relief
for Novo Nordisk as the U.S. authority had issued a complete
response letter in Aug 2013 for the same. Novo Nordisk
resubmitted its application in Oct 2013. The product is expected
to be launched in the U.S. soon.
In Oct 2013, NovoEight received U.S. approval for treating adults
and children with hemophilia A for control and prevention of
bleeding, perioperative management and routine prophylaxis to
prevent or reduce the frequency of bleeding episodes. The drug
was also approved in the EU and Japan.
Moreover, Novo Nordisk filed regulatory applications for
liraglutide in both the U.S. and EU in Dec 2013. The company is
looking to get liraglutide approved for chronic weight management
in adults suffering from obesity or those overweight with
Novo Nordisk also provided its guidance for 2014. The company
expects sales to grow 8−11% in local currencies. Operating profit
growth is expected to be around 10% in local currencies. The
company expects Victoza to continue performing well thereby
driving growth. A modest sales contribution from Tresiba (type II
diabetes) is also expected. The product is now launched in 8
countries and is expected to be launched in 20 other countries
We are encouraged by Novo Nordisk's fourth quarter results. Novo
Nordisk's shares gained over 2.8% following the earnings release.
The company's Diabetes Care business played a major role in
boosting the company's bottom line. Novo Nordisk holds a strong
position in the diabetes market. We note that several big pharma
Eli Lilly and Company
) also have a presence in the diabetes market. We are however
encouraged by the recent product approvals at Novo Nordisk.
Novo Nordisk carries a Zacks Rank #3 (Hold). Some better-ranked
). While Actelion carries a Zacks Rank #1 (Strong Buy), Allergan
holds a Zacks Rank #2 (Buy).