It has been a while since Novo Nordisk (OMX: NOVO B) has disappointed investors. Since the share is trading with such a high multiple, any perceived miss will have a pronounced impact. Therefore it is not a major shock that today's interim report led to a three percent decline, even though the negative issues in the report are at the very least debatable. First quarter sales of 17 551 000 000 DKK is 13% more than last year but a 2% decline sequentially. Healthcare reforms explain much of that.
Operating profit grew close to 6.4 billion as operating margin improved to 36% from 33-34% range maintained for the entire last year. The company reported diluted earnings per share of 8.32 DKK (about 1.48$ for ADR share holders). Outlook for 2012 was adjusted slightly in a number of points. The overall effect of those seems slightly positive.
First quarter sales of Victoza were just under 2 billion DKK, which while being 81% more than on Q1 2011, are 5% less than on Q4 2011. The company attributes that to rebate reversals and normal seasonality. So far Victoza is holding competitors at bay. The global market share of Victoza in the GLP-1 segment was 62% vs. 58% during Q4 2011. The GLP-1 class value share of total diabetes care market increased to 4.8%.
Modern insulins NovoRapid, NovoMix mix and Levemir reported sales were pretty much on par with Q4 2011 and up 17% year-on-year at 7.87 billion. Human insulin sales were stable around 2.7 billion. Novo Nordisk now commands half of the total insulin market and a quarter of global diabetes care market, which continues to grow high single digits annually.
Novo has new products approaching market as well. Tresiba and Ryzodeg regulatory reviews continue. Victoza cardiovascular outcomes trial, which could potentially go towards obesity indication too, has now completed enrolment. Phase 3 programme for long-acting recombinant factor VIII compound, N8-GP for haemophilia A treatment was initiated. The lone negative pipeline news related to anti-NKG2D in rheumatoid arthritis, which did not show a treatment effect on the disease in Phase 2a trial.
The current Chairman of the Board Sten Scheibye is joining the Board of Novo Nordisk Foundation and is set to become its chairman in 2013. Therefore Novo Nordisk expects to elect a new chairman next year. The Board expects to propose current vice chairman Dr Göran Ando for the job. The company also said it plans to hire more people in the United States as the company plans to add nearly 15% or close to 600 people more to its workforce in the country.
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