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Novo Nordisk Q1 beats forecasts, raises outlook

http://www.forexyard.com/en/news/Novo-Nordisk-Q1-beats-forecasts-raises-outlook-2010-04-27T104412Z-UPDATE-3

* Q1 operating profit 4.38 bln DKK, beats 3.88 bln fcast ($1=5.584 Danish Crown)

* Says U.S. prescription data encouraging for Victoza sales

* Victoza Q1 sales 370 million DKK, two-thirds is stocking

* Raises 2010 operating profit, sales guidance

* Shares up 1 percent, outperform European peers

By Anna Ringstrom and Karin Jensen

COPENHAGEN, April 27 (Reuters) - World No.1 insulin maker Novo Nordisk posted forecast-beating first-quarter profits, helped by strong sales of new potential blockbuster drug Victoza and its modern insulins, and raised its outlook.

Operating profit rose to 4.38 billion Danish crowns ($784 million) from 3.81 billion a year earlier, beating all analyst estimates in a Reuters poll.

"The increasing use of our modern insulins is the primary driver of growth," Chief Executive Lars Rebien Sorensen said. "Furthermore, the roll-out of Victoza, our new treatment for type 2 diabetes, is progressing well in both the U.S. and Europe."

U.S. healthcare reform had a minor negative sales impact.

Group sales rose 9 percent to 13.7 billion crowns, beating a forecast 13.5 billion. Sales in the biggest product group, modern insulins, rose 17 percent to 5.86 billion crowns, topping a forecast 5.84 billion.

Victoza, which after delays was launched in nine European countries last year and in the United States in February, is now commercially available in 15 countries.

"The initial performance in the U.S., as measured by prescription level data, is encouraging," Novo said.

Sales of Victoza reached 370 million crowns in the quarter. But suppliers' stock building accounted for two thirds, and Deutsche Bank said in a note that suggested a weaker trend this quarter.

The bank said launch costs had been lower than expected.

Novo expects its biggest new drug hope, due for launch in Japan this quarter, to be a blockbuster, meaning it would reach $1 billion in sales within its first five years on the market, despite the U.S. approval including a boxed cancer warning.

Novo Chief Financial Officer Jesper Brandgaard told Reuters he expected Victoza sales to fall this quarter. "From there, it will grow. We'll be very disappointed if we don't exceed 1 billion crowns in Victoza sales this year."

"We see a very stable uptake of patients week for week."

Novo is however bracing for fiercer competition.

After delays, Eli Lilly and Amylin Pharmaceuticals Inc expect U.S. approval this year for Bydureon, a once-weekly version of their Byetta.

Taspoglutide, under development by Roche Holding AG and Ipsen SA, is another once-weekly GLP-1 drug for Type 2 diabetes.

Brandgaard said he hoped use of GLP-1 class drugs, to which Victoza belongs, would grow to 5 percent of the diabetes care market in the next few years from a current 3 percent.

RAISES OUTLOOK

"It's a good report with a small (outlook) upgrade. Victoza has had a really good start," said Sydbank analyst Rune Dahl.

Novo raised its 2010 outlook to see sales growth in local currencies of 7-10 percent and reported growth around 3 percentage points above that.

"This should allay any fears that the market may have had about the impact of U.S. healthcare reform," PiperJaffray said in a note.

Novo forecast operating profit growth in local currencies of more than 10 percent, with reported growth around 6 percentage points above that.

The previous guidance, given in February, had been for sales growth of 6-10 percent and profit growth of around 10 percent.

"The market had expected an upgrade and Novo delivered," said Soren Sorensen, head of equities at Amagerbanken. "The results confirm that the share price rise we have seen has been justified," he said.

Some analysts said the outlook was still conservative and there was room for more upgrades.

Shares in Novo, which have outperformed European peers this year, were up 1 percent at 1009 GMT while the STOXX 600 European healthcare index was down 1 percent.

Morgan Stanley said the value of Novo's shares still lagged improving fundamentals. "Novo is a structural growth story with limited patent risk ... and expanding margins."