COPENHAGEN (Reuters) - Danish drugmaker Novo Nordisk beat first-quarter operating profit forecasts on Friday, helped by higher sales of its biggest new drug hope, a treatment for type 2 diabetes.
With Novo’s traditional insulin treatments facing U.S. price pressures and close to losing patent protection, the world’s biggest maker of diabetes drugs is pinning its hopes a once-a-week injection that helps reduce blood sugar and weight.
Sales of the treatment, branded Ozempic, rose to 1.4 billion Danish crowns ($209 million) in the quarter, trumping analyst forecasts for 1.3 billion crowns.
Ozempic, the newest drug in the so-called GLP-1 drug class, takes aim at Eli Lilly’s Trulicity, which has been taking market share from Novo’s former flagship treatment, once-a-day Victoza.
“Based on our launch of Ozempic in the U.S. we see that we are stopping our loss in market share (of GLP-1 drugs),” Chief Executive Lars Fruergaard Jorgensen told reporters.
However, Ozempic is also eating into sales of Victoza, which fell more than analysts’ expected in the quarter, although Jorgensen said the decline was in line with Novo’s projections.
“We have never expected Victoza to keep growing when we launched Ozempic because it is just a much better product,” he said.
Novo shares were steady at 0800 GMT, having recouped early losses.
GLP-1 drugs, which imitate an intestinal hormone that stimulates the production of insulin, make up a growing share of the diabetes market, and Novo, an early mover together with Eli Lilly, has a 46.1 percent share of the market.
The drugs have proved effective in reducing diabetes patients’ blood glucose levels and weight and have also showed cardiovascular benefits in studies. But on the downside, they drugs are more expensive than some other treatments.
Novo’s first-quarter operating profit of 14.2 billion crowns beat analysts’ average forecast of 13.2 billion crowns, helped by a reversal of some writedowns..
The company kept its 2019 forecasts for sales growth of 2-5 percent and operating profit growth of 2-6 percent, both in local currencies.
However, sales and operating profit growth in Danish crowns are now expected to be 3 and 5 percentage points higher than the local currency level, respectively, compared with previous guidance of 2 and 4 percentage points higher.
Novo shares are trading at around 19 times forecast earnings, above the average multiple for the sector of roughly 16 times, according to Eikon Refinitiv data.
Reporting by Stine Jacobsen, Editing by Sherry Jacob-Phillips and Mark Potter