Denmark’s Novo Nordisk faces diminished profits and price-fixing lawsuit in US

Denmark's Novo Nordisk, the world's top insulin maker, said on Thursday its 2016 net profit was below forecasts due to falling product prices in the US, a huge market for the company.

Denmark's Novo Nordisk faces diminished profits and price-fixing lawsuit in US
Photo: Søren Bidstrup/Scanpix
The group, which controls nearly half of the global market for insulin, posted a nine percent rise in 2016 net profit, but its operating income fell by two percent to $48.4 billion (€45.1 billion).
After announcing in September that it would slash 1,000 jobs around the world, the group expects another slowdown in its 2017 operating performance.
Net profit in 2016 stood at 37.9 billion kroner (€5 billion, $5.4 billion) with a turnover of 111.8 billion kroner, up six percent, at the top end of the downwards- revised forecast range in October.
For 2017, it expects sales growth of between one and six percent in Danish kroner and a rise in operating profit between zero and five percent.
“2016 was a challenging year. While we met our financial guidance for the year, strong market headwinds in the USA meant that we had to revise our long-term financial targets,” chief executive Lars Fruergaard Jorgensen said in a statement.
Novo Nordisk said it held a 37 percent market share of diabetes treatments in the US. But sales of its products in the world's largest economy fell by two percent last year due to lower prices and the loss of a contract for its top-selling insulin drug Novolog.
Eleven patients filed a lawsuit in a Massachusetts federal court on Monday, accusing Novo Nordisk and two other insulin makers — France's Sanofi and American Eli Lilly — of fixing the life saving drug's prices.
Novo Nordisk said it did not expect the lawsuit to cause financial harm to the company.
In the long term, Novo Nordisk said it expects its operating profit to grow annually by five percent. This target had remained at 20 percent for 20 years until February 2016, when it was slashed to 10 percent.
“However, 2016 was also a year in which we announced very encouraging clinical data for our key products, providing a solid foundation for future growth,” Jorgensen said.
His comments come three days after the company announced it would invest 135 million euros over the next 10 years at an Oxford University research centre to find treatment for type 2 diabetes.

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Novo Nordisk sees increased profits despite pandemic

Denmark's Novo Nordisk, the world's number one producer of insulin, on Wednesday reported an eight percent bump to net profits in 2020 despite the pandemic leading to a drop in new patients.

Novo Nordisk sees increased profits despite pandemic
Photo: Mads Claus Rasmussen/Ritzau Scanpix

In line with analysts' expectations, the company recorded an annual net profit of 42.1 billion Danish kroner (5.6 billion euros).

Revenue came in at 126.9 billion kroner, up four percent compared to a year earlier, not counting currency effects, driven by sales of GLP-1 products for treating diabetes.

According to Novo Nordisk, the company claimed 47.2 percent of the global market for insulin in November 2020, and 39.4 percent of the US market, which is the drugmaker's single largest market.

The International Diabetes Federation (IDF) estimates that there are over 425 million diabetics in the world, a number expected to top 629 million by 2045 as changing diets and lifestyles provoke the condition whereby the effectiveness of naturally produced insulin is reduced and people cannot convert sugar in their bloodstream for use as energy, causing health problems such as heart disease, vision loss and kidney disease.

However, only half of people with diabetes are currently diagnosed and of those only half are receiving treatment, according to the IDF, which says an estimated four million people die from the disease and the health complications it causes every year.

The Covid-19 pandemic cut into the number of people receiving help, according to Novo Nordisk.

“During the period of social distancing implemented in many markets, fewer new patients are initiating treatment,” said the company.

Novo Nordisk also develops and markets treatments for haemophilia and growth disorders, where sales fell by four percent and increased by six percent respectively, not counting currency effects.

Sales of its anti-obesity medicines, mainly Saxenda, increased by three percent.

In 2021, Novo Nordisk expects sales to grow by five to nine percent and operating profit to increase by four to eight percent.

In the early hours of trading on the Copenhagen stock exchange, shares in Novo Nordisk were up 4.6 percent.

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