Falling US prices pull down Danish Novo Nordisk shares

Denmark's Novo Nordisk, the world's top insulin maker, on Wednesday posted a rise in net profit in the second quarter, but saw its shares fall as it anticipated lower US prices next year.

Falling US prices pull down Danish Novo Nordisk shares
File photo: Jens Nørgaard Larsen/Ritza Scanpix

The group said its 2019 “average prices after rebates are expected to be lower” compared to 2018 in the United States, where it generates almost half of its turnover, due to a change in legislation which reduces prices on prescription drugs. 

The share price fell nearly 4.8 percent around 0930 GMT on the Copenhagen stock exchange in a market down by 0.83 percent.

For the second quarter, the group posted a net profit of 10.34 billion kroner (more than 1.3 billion euros, $1.5 billion), up by four percent year-on-year.

Sales, which fell by 4.3 percent to 27.4 billion kroner, were weighed down by a four percent decline in diabetes treatments by Novo Nordisk's flagship brands such as Tresiba and Victoza, which represent 84 percent of the company's total sales.

Sales of haemophilia treatments and growth hormones also fell 10 and 4 percent, respectively.

The group said “sales growth is expected to be partly countered by intensifying global competition both within diabetes care and biopharmaceuticals” and “continued pricing pressure within diabetes care, especially in the USA”.

Analysts surveyed by the Stockholm-based independent consensus estimate service SME Direkt had expected sales of 27.7 billion kroner.

The depreciation of the US dollar compared to the Danish krone also had a negative effect on sales.

Forecasts for 2018 have been left unchanged, with local sales up 3 to 5 percent and a rise in operating profit by 2 to 5 percent.

Novo Nordisk controls nearly half of the global market for insulin. Its haemophilia and hormonal treatments represent a fifth of its turnover.

READ ALSO: Danish drugmaker Novo Nordisk profits jump in diabetes scourge


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.

READ ALSO: Novo Nordisk cuts donations to US politicians