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Novo Nordisk's Dichotomy Abounds

By Brian Orelli, PhD - Feb 6, 2018 at 4:30PM

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It's a tale of two cities for the diabetes specialist.

Novo Nordisk (NVO 0.19%) rounded out 2017 with newer medications growing rapidly, mostly offset by declines in older medications. Add in currency changes, and the diabetes specialist ended the year at about the same place it was the year prior.

Next year looks to be more of the same, with small sales growth expected that will be offset by currency changes.

Novo Nordisk results: The raw numbers 




Year-Over-Year Change


111.7 billion DKK

111.8 billion DKK


Income from operations

48.97 billion DKK

48.43 billion DKK


Earnings per share

15.39 DKK

14.96 DKK


Data source: Novo Nordisk. DKK = Danish kroner; $1 = 6.01 DKK (as of Feb. 6, 2018).

What happened with Novo Nordisk this year?

  • While revenue was flat in Danish kroner, sales were up 2% in local currencies, boosted by GLP-1 drug Victoza, next-generation insulin Tresiba, and obesity drug Saxenda, which were up respectively 18%, 85%, and 64% year over year in local currencies.
  • On the downside, U.S. sales of hormone-replacement therapy Vagifem crashed after facing generic competition. Sales of older modern insulins, which still make up a bulk of the total insulin sales, fell 7% year over year in local currencies. Growth-disorder products also fell 22% year over year in local currencies, although they make up less than 6% of overall sales, so the impact wasn't horrible.
  • Novo's hemophilia franchise held steady, which is a win given the increasing competition.
  • In December, the Food and Drug Administration (FDA) approved Ozempic, the once weekly version of Victoza. After a positive recommendation from regulators in the EU, Novo expects the official approval from the EU Commission this quarter.
  • In addition to plans to raise the company's dividend by 3%, the board expects to repurchase up to 14 billion Danish kroner of shares this year, although management noted that it could be suspended if an opportunity for an acquisition presented itself.
Doctor taking a patient's blood glucose with medication on the table.

Image source: Getty Images.

What management had to say

In a world where it seems that every week, a small biotech company is getting acquired, Novo's outgoing chief financial officer Jesper Brandgaard reminded investors there's another way for large companies to add to their pipelines with less risk and capital outlay: "I also note that the focus should not solely be on acquisitions, it should just as well also be on in-licensing opportunities where we share the risk and rewards with the current owner of the assets."

Karsten Munk Knudsen, who's about to become Novo's chief financial officer, explained how changes in operating margins, which are expected to be slightly lower this year, isn't something to be concerned with:

"That margin erosion will come primarily from two sources, one is linked to the launch of Ozempic in the U.S., so we're putting significant resources behind succeeding with the launch of Ozempic -- being one -- and then the other piece is when you look at other operating income we had and non-recurring income in the third quarter related to a licensing deal with Innate Pharma in the third quarter of '17, which would not take place in 2018."

Looking forward

For this year, management guided for sales growth of 2% to 5% in local currencies. It'll be the same story as last year with next-generation insulins, GLP-1 drugs that now include Ozempic, and its obesity drug Saxenda continuing to grow. This will be offset by competition for older drugs that reduces volume and creates pricing pressure.

Operating profits are expected to grow 1% to 5% in local currencies that, as Knudsen noted, reflects the costs for launching Ozempic.

On the clinical trial front, Novo expects data from its phase 3a trial testing the oral version of Ozempic in the first quarter. This could be a game changer if the data is good, since all the current GLP-1 drugs have to be injected. The company is also testing Ozempic as an obesity treatment and looking at the drug's ability to improve cardiovascular outcomes. Those trials are just about to start, however, so it will take a few years for them to play out.

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