UPDATE 3-Novo Nordisk ups outlook, Q4 EBIT beats consensus

* Q4 EBIT falls to 3.22 bln DKK, above forecast

* Announces bigger-than-expected 7.5 bln share buyback

* Shares fall on profit taking after strong year-to-date

(Adds company, analyst comment, background, updates share)

By Anna Ringstrom and Karin Jensen

COPENHAGEN, Feb 2 (Reuters) - World No.1 insulin maker Novo Nordisk (NOVOb.CO) posted slightly better quarterly operating profits than expected as sales of its key modern insulins grew and raised its 2010 outlook on hopes of better gross margins.

But shares in Novo, which won a belated U.S. approval for its new-generation potential blockbuster Victoza last week, fell as investors took profits after big year-to-date gains.

"Rumours of a strong report have also supported the share in the past week. It's 'buy on the rumours, sell on the facts' today," said Amagerbanken Chief Trader Soren Sorensen.

Novo forecast operating profit growth of some 10 percent and sales growth of 6-10 percent this year. Previous guidance was for more than 5 percent and 5-10 percent respectively in local currencies -- though lower in Danish crowns.

The firm told an analysts conference the profit forecast was based on sales at the mid-level of the range. [ID:nWEB7770]

"The forecast reflects further improvement of the gross margin, increased spending for R&D activities ... and higher licence fees and other operating income," Novo said.

Analysts had seen the previous guidance as moderate, amid uncertainty around a planned U.S. healthcare reform, and said the revision had been expected and mostly priced in.

Recent political events indicate the U.S. reform may turn out less damaging to drugmakers this year than initially feared. [ID:nN28130768]

"In light of the approval for Victoza in the U.S. and Japan and against the background of initial expectations, the upgrade of the (2010 guidance) is quite cautious," said Stig Nyman, analyst at Lan & Spar Bank.

Fourth-quarter operating profit fell to 3.22 billion Danish crowns ($602 mln) from 3.37 billion a year earlier versus a mean forecast for 3.14 billion in a Reuters poll. [ID:nLDE6101UK]

Some analysts said costs at the Danish firm, which began rolling out Victoza last year in Europe, had been unexpectedly high in the quarter. Sales and distribution costs were 32 percent of revenue, research and development costs 18 percent.

The 2009 performance was driven mainly by robust sales growth at the modern insulins business, although currency effects weighed on the fourth-quarter result, Chief Executive Officer Jesper Brandgaard told Reuters.

Modern insulins sales grew 14 percent to 5.7 billion crowns, nearly half of the group total.

The shares, which hit records last week after the Victoza news, fell 2.59 percent to 365.00 crowns at 1618 GMT while the DJ Stoxx European healthcare index .SXDP was slightly up.

VICTOZA ROLL-OUT

Novo holds roughly half the insulin market measured by volume in its main markets Europe and fast-growing North America. North America has the world's highest prevalence of diabetes with more than 10 percent of adults affected.

Novo expects sales of Victoza, which belongs to the new GLP-1 class of drugs that stimulate insulin release when glucose levels become too high, to surpass $1 billion by 2015.

But the once-daily drug may hit fierce competition from once-weekly rivals such as the long-acting version Eli Lilly's (LLY.N) and Amylin Pharmaceuticals's (AMLN.O) Byetta, which U.S. health authorities may approve in March.

U.S. sales of the drug could also be dented by a cancer safety warning called for by the U.S. Food and Drug Administration. [ID:nLDE5BK0R6]

Analysts at Jefferies International said Novo has one of the best businesses in its sector but that the market is still looking for "unrealistically high peak sales for Victoza" because of the cancer warning and daily injection profile.

Victoza has been launched in nine European countries. Novo plans to launch it in the U.S. in coming weeks and in Japan in the first half of 2010.

Novo, which has flagged the roll-out would be costly, said the launch in Europe had been "very encouraging".

Brandgaard warned costs would outweigh earnings from Victoza in the U.S. this year: "With regards to operating profit we will spend more money in the United States than sales will bring in."

Novo proposed a dividend of 7.5 crowns per share for 2009, a 25 percent rise, and announced a bigger-than-expected share buyback programme of 7.5 billion crowns during 2010. (Additional reporting by Peter Levring, Ben Hirschler and Peter Starck; Editing by Mike Nesbit and Sharon Lindores) ($1=5.352 Danish crowns)