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Novo meets 'sky-high' expectations with 18% sales growth

Danish company hikes 2013 forecast on Victoza leap, Tresiba hopes
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Novo Nordisk ($NVO) racked up some impressive gains in 2012: Sales up 18%, net profits up 25%, EPS up 30%, gross margin up 1.7 percentage points. And the company hiked its forecast for 2013, now that its new diabetes drug Tresiba has won European and Japanese approval--and the company has greater hope for an FDA nod.

So, another year of double-digit growth for the Danish drugmaker, known best for its diabetes drugs, and expectations for up to 11% sales growth, 10% on the profits side. The quotes from analysts and executives were full of metaphor: "[T]he fourth quarter was another blow-out result," Alm Brand's Michael Jorgensen told Reuters. "Expectations to the report were sky high and I think they met those expectations," Sydbank analyst Soren Hansen said. And CFO Jesper Brandgaard told Bloomberg that his company is "a train on the rails and moving steadily forward."

It's tempting to make Novo into an example of why drugmakers are so interested in the diabetes market. With the right diabetes products, pharma companies can ride favorable demographics and worldwide diet and health trends. Novo has certainly done that. But if it were that easy, then every company's diabetes division would be growing at the same rate as that of the Danish drugmaker--and they're not.

To reach its 2013 targets, though, Novo has some challenges of its own. It has to persuade FDA to finally approve Tresiba, a.k.a. degludec, its challenger to Sanofi's ($SNY) dominant Lantus. And it has to persuade austerity-minded European governments that Tresiba is worth a premium price.

FDA reviewers and panel experts have expressed concerns about Tresiba's cardiovascular safety. Novo's ambitions for the drug could be hampered if FDA requires strict warnings on its label. The company will definitely have to do a postmarketing study to examine Tresiba's cardiovascular effects, CEO Lars Sorensen told reporters today, but he wouldn't comment on label negotiations with FDA.

Sorensen did comment on Tresiba's recent European approval, however, Bloomberg reports. "We got a phenomenal label in Europe," he said. "That is influencing our ability to market it in many other local markets in Asia."

Novo is rolling Tresiba out country by country in Europe, negotiating with government payers as it goes. The company is looking for a "significant price premium" over Lantus, Brandgaard said. Up to 30% or 40%, in fact, Bloomberg notes. All that depends on what cost-effectiveness watchdogs say about the drug, and German and U.K. agencies can be tough on that score.

- see the Novo release
- read the Bloomberg piece
- get more from Reuters

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