UPDATE 3-Drugmaker Novo Nordisk's 2007 tops expectations

(Adds details, analyst)

By Kim McLaughlin

COPENHAGEN Jan 31 (Reuters) - Denmark's Novo Nordisk (NOVOb.CO) posted a 2 percent drop in 2007 operating profit on Thursday, but beat analysts' expectations and said it expected higher profits this year, lifting its shares in a weak market.

The world's biggest maker of insulin said earnings before interest and taxes fell to 8.9 billion crowns ($1.77 billion) from 9.1 billion a year earlier but topped a mean estimate of 8.8 billion in a Reuters poll of analysts.

Novo said operating profit was impacted by non-recurring costs of 1.3 billion crowns related to discontinuing inhaled insulin project AERx. Adjusted for this and the impact from currencies, underlying operating profit rose by close to 25 percent to 10.3 billion crowns, it said.

The group said 2008 operating profit was expected to grow by at least 25 percent, with sales growing about 6.5 percent.

"The results are really strong, but the share also rose yesterday on expectations the results would be solid, so we've already seen some of that effect," said Dansk Aktie Analyse analyst Michael Bjergby.

By 1320 GMT, Novo shares were 0.3 percent higher at 308.50 crowns, outperforming the Copenhagen bourse's top-20 OMX index .OMXC20, which was down 1.1 percent.

Novo's shares are up more than 25 percent over the last year, compared with a 20 percent drop in the Dow Jones Stoxx Health Care Index .SXDP.

"Novo reported excellent results and significantly increased guidance even beyond our expectations," Bear Stearns said in a research note, repeating its "Outperform" rating of its shares.

Novo Chief Executive Lars Sorensen said 2007 results were driven by robust sales growth in all major markets and the group's portfolio of modern genetically improved insulins and gross margin improvement.

"This makes us confident that we will also be able to deliver solid underlying growth in 2008," he said in a statement.

Sales rose 8 percent to 41.8 billion crowns against the mean in the Reuters poll of 42.0 billion crowns.

Europe's sixth-biggest drug maker by market capitalisation said all regions realised solid growth rates, with North America and Europe as the primary contributors.

Sales of what the group calls modern insulins, which are insulin analogues with modified characteristics, rose 29 percent to 14 billion crowns while sales of human insulin fell 7 percent to 12.6 billion crowns.

Sales of anti-bleeding drug NovoSeven rose 4 percent to 5.9 billion crowns.

The Bagsvaerd-based group, which competes with larger drugmaker Eli Lilly (LLY.N) and Sanofi-Aventis (SASY.PA), said it kept its position as global leader with 53 percent of the total insulin market and 43 percent of the modern insulin market, both measured by volume.

Last month, Novo terminated development of an inhaled insulin product as an alternative to traditional injections, saying it was unlikely to offer significant clinical or convenience benefits.

The group proposed a dividend of 4.50 crowns per share for 2007.

(Reporting by Kim McLaughlin; Editing by Paul Bolding and Sue Thomas)