) reported fourth quarter 2012 earnings of $1.83 per American
Depository Receipt (ADR), up 21.2% from the year-ago period.
Earnings were boosted by strong revenues in the reported quarter.
Revenues in the fourth quarter of 2012, increased 16% on a
reported basis and 12% in local currency year over year.
For full year 2012, Novo Nordisk's earnings were $6.71 per
ADR, up 19.6%. Revenues for the year 2012 were $13.48 billion (up
18% on a reported basis and 12% in local currency year over
year). Revenues were below the Zacks Consensus Estimate of $13.78
All growth rates mentioned below are on a year-over-year and
local currency basis.
In 2012, total revenues grew 12% driven by strong sales in
North America (up 19%), International Operations (up 16%) and
China (up 16%). Sales in Europe grew 2%. Key sales drivers were
Modern Insulins and Victoza.
Geographically, North America was the largest contributor (66%
share of growth) to total revenues followed by International
Operations (20%) and China (11%). Healthcare reforms and pricing
pressure in Europe, the US, China and other international markets
negatively impacted revenues by 1.5%.
The Diabetes Care segment recorded growth of 15%. Modern
Insulins generated strong revenues (up 15%) driven by NovoRapid
(up 16%) and Levemir (21%). 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 50% in
2012. Victoza witnessed growth across all regions.
Protein-related product sales were up 3%. Oral antidiabetic
product sales and human insulins sales were flat year over
Sales in the Biopharmaceuticals segment increased 2%. Strong
sales of Norditropin (up 8%) and NovoSeven (up 2%) contributed to
the increase, though partially offset by other product sales
Modern Insulins contributed 55% to total sales growth whereas
Victoza contributed 39%.
Research and development (R&D) costs and sales and
distribution costs increased 11% and 8%, respectively. Novo
Nordisk's efforts to develop its pipeline, primarily liraglutide
and IDegLira, drove R&D expenses in 2012. Increase in sales
and distribution cost was primarily driven by the expansion of
the US sales force and costs for the global launch of Tresiba.
Tresiba and Ryzodeg gained EU approval earlier this year.
In local currencies, guidance for operating profit growth is
expected to be around 10%, mainly due to significant costs
related to the expected global launch of Tresiba, the expanded US
sales force as well as sales and marketing investments in China.
In local currencies, sales growth is expected to be in the range
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.
We note that Victoza is facing new competition in the market.
Net profit is expected to grow in double digits.
The stock carries a Zacks Rank #2 (Buy). Other large-cap
pharma companies like
Eli Lilly and Company
) are also Zacks Rank #2 stocks.
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