Novo invests $400 mln in new China insulin plant

COPENHAGEN (Reuters) - Denmark's Novo Nordisk (NOVOb.CO) said on Friday it would invest nearly $400 million to build an insulin production plant in Tianjin, China.

The plant will create 500 new jobs and is the company's largest investment outside Denmark.

"This is a sign that they are very optimistic about growth coming from China. The Chinese market will grow very fast in the coming years," said Peter Bertram Andersen, an analyst at Jyske Bank.

Novo, the world's biggest maker of insulin, said China will play an increasingly important role in its global operations.

Nearly 40 million people have diabetes in China, the second highest number after India. Another 64 million have prediabetes as the population adopts a Western lifestyle with too little exercise and diets high in saturated fat.

"Novo is not feeling the effects of the financial crisis, as you can see in their third quarter report," Andersen said. "They are earning a lot of money and don't have any debt.

"Maybe you can postpone buying that new flat screen TV but not your insulin. Novo may see price pressure in the longer term, but the volume will be there."

Novo reported free cash flow of 8.6 billion Danish crowns ($1.48 billion) for the first nine months of 2008, up from 5.8 billion in the year-ago period.

The Tianjin plant will be built next to an existing Novo plant established in 1996 and expanded twice. It will be operational in 2012 and will make insulin products such as NovoMix, NovoRapid and Levemir.

Novo currently employs about 1,700 people in China.

By 0847 GMT, Novo shares traded up 2.7 percent at 307 crowns, while the Copenhagen top 20 index was up 2.5 percent.

(Reporting by Gelu Sulugiuc; Editing by Hans Peters)