Novo Nordisk (NYSE:NVO) released earnings for the first half of 2017, and while revenue growth wasn't spectacular, considering how last year went for the diabetes specialist, investors will take it.

Novo Nordisk results: The raw numbers


H1 2017

H1 2016

Year-Over-Year Change


DKK 57.1 billion

DKK 54.7 billion


Income from operations

DKK 26.9 billion

DKK 24.8 billion


Earnings per share

DKK 8.07

DKK 7.63


Data source: Novo Nordisk. DKK = Danish kroner.

What happened with Novo Nordisk?

  • Changes in exchange rates helped boost revenue in the first half of the year; in local currencies, sales were only up 3% year over year.
  • Diabetes and obesity drugs boosted overall sales with the segment increasing sales by 11%, or 10% in local currencies, in the first half of the year. Hemophilia drugs were down slightly, while drugs for human growth disorders and Novo's catchall "other biopharmaceuticals" were down 27% and 52% respectively. The latter was caused by the expected decline of menopause treatment Vagifem, which now faces generic competition.
  • Within diabetes, top-selling Victoza continues to lead the way with sales up 21% year over year, or 18% in local currencies. The drug is benefiting from increased use of GLP-1 drugs by doctors in the U.S., but Victoza is actually losing market share to other GLP-1 products that only have to be injected once a week.
  • In the near term, the addition of data to Victoza's label that shows better cardiovascular outcomes for patients taking the drug could help turn that trend around. EU regulators recently added the data to the drug's label, and Novo Nordisk expects to hear this quarter from the U.S. Food and Drug Administration about its request.
  • Longer-term, Novo Nordisk has a weekly GLP-1 version of its own, semaglutide, which could be approved later this year. And even longer-term, there's potential for an oral version of semaglutide, which is currently in 10 clinical trials in a program dubbed "Pioneer."
  • The launches of next-generation insulin drugs -- Tresiba, Xultophy, and Ryzodeg -- continue to progress well with sales in the first half of the year more than doubling the same period of 2016. But revenue from the drugs is still small compared to older insulins, which declined 1% as a group.
A vial of insulin held by two fingers above a tray of them

Image source: Novo Nordisk.

What management had to say

Last year's changed expectations were caused by insurers and pharmacy benefit managers negotiating lower prices, which CEO Lars Fruergaard Jorgensen said investors should continue to expect:

In the U.S., formulary negotiations with pharmacy benefit managers and managed care organizations for 2018 are progressing. Average prices after rebates are expected to be lower compared [to] 2017, driven by a changing pricing environment, especially in the basal insulin segment. Market access for our key products is anticipated to remain broadly unchanged compared to 2017. However, at this stage, there's still [a] level of uncertainty pertaining to formularies yet to be finalized and announced. This includes Medicare Part D and custom plans, and potential impact on price and volume.

On the plus side, Jorgensen noted how the company's next-generation insulin drugs have supported each other rather than cannibalizing sales; this should be a positive for the U.S. launch of Xultophy, which began in May:

In countries where Tresiba and subsequently Xultophy [have] been launched, Xultophy has contributed to continued market-share gains in the basal insulin segment. As an example, Tresiba has obtained a market share of 28% in Switzerland, and when combining Tresiba and Xultophy, the total value of market share is 56% in the basal insulin segment.

Looking forward

After the strong-enough second quarter, management increased the low end of its revenue guidance to growth of 1% to 3% in local currencies, up from previous guidance in May of 0% to 3% growth. Operating profit is now expected to grow 1% to 5% in local currencies, up from previous guidance of down 1% to up 3%.

In addition to the cardiovascular data for Victoza, Novo Nordisk also has cardiovascular data showing that Tresiba was non-inferior to Sanofi's (NASDAQ:SNY) Lantus -- clinical-trial speak for essentially the same, although Tresiba looked slightly better. Novo Nordisk recently submitted that data to U.S. and European regulators, which could help drive patients to switch to the next-generation insulin.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.