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CORRECTED-UPDATE 2-Novo cuts sales forecast after U.S. contract losses
May 5, 2014 / 10:16 AM / 4 years ago

CORRECTED-UPDATE 2-Novo cuts sales forecast after U.S. contract losses

(Corrects MAY 1 story to show Q1 sales growth 7 pct in local currencies, Novo Nordics’ most valuable company)

* Q1 EBIT rises to 8.03 bln DKK, in line with forecasts

* Sales growth below double-digit for first time in 48 qtrs

* Cuts FY sales outlook to 7-10 pct, EBIT outlook unchanged

* CFO says company won’t join sector M&A

* Shares down 3.2 pct by 0835 GMT

By Shida Chayesteh

COPENHAGEN, May 1 (Reuters) - Denmark’s Novo Nordisk A/S , the world’s top maker of insulin, has lowered its 2014 sales outlook, hurt by the loss of two U.S. contracts and competition from copycat versions of its diabetes drug Prandin, it said on Thursday.

Novo, whose rising share price has made it the Nordic region’s most valuable company, is encountering growing resistance on prices from healthcare insurers and governments, challenging its strategy of raising prices and charging a premium for innovative medicines.

The company said on Thursday last year’s loss of two U.S. managed care contracts with Express Scripts Holding Co, a purchasing organisation for prescription programmes serving between 40 and 45 million Americans, would affect its 2014 growth rate slightly more than previously anticipated.

Novo lowered its guidance for full-year sales growth to between 7 and 10 percent from between 8 to 11 percent as seen in January, while keeping operating profit growth guidance unchanged at around 10 percent in local currencies.

Sales of diabetes drug Victoza - one of the products hurt by the contract loss - grew to 2.92 billion Danish crowns ($542.4 million) in the first quarter, slightly lagging an expected 3.07 million according to a Reuters poll of analysts.

Pricing pressure from cash-strapped governments and tough competition from generics has prompted many drugmakers to consider divesting certain non-core business units, helping trigger a wave of mergers and acquisitions in the sector that has reached $153 billion so far this year.

But Novo’s head of finance Jesper Brandgaard told reporters the company would not be joining the dealmaking frenzy.

“We have no intention to participate in sector consolidation,” Brandgaard said.


Novo’s sales growth of 7 percent year-on-year in local currency terms marked the first time the company has failed to post double-digit growth in 48 quarters.

Indeed, growing the Nordic region’s biggest company by value is getting tougher, especially after a decision by the U.S. Food and Drug Administration last year to delay approval of Tresiba, Novo’s new long-acting insulin.

Novo said recruitment for the cardiovascular outcomes trial for Tresiba was progressing ahead of plans and the company expects to have sufficient data to support an interim analysis by mid-2015.

“That is in principle moving the launch forward some nine months or so, that’s very positive,” Brandgaard told reporters.

Novo’s earnings before interest and tax (EBIT) rose to 8.03 billion crowns ($1.5 billion) in the first quarter from 7.56 billion a year earlier, slightly above a forecast for 7.87 billion in the Reuters poll.

Novo shares - up 22.1 percent this year while the main Copenhagen blue chip index in Copenhagen is up 11.6 percent - were down 3.2 percent at 234.90 crowns by 0835 GMT, underperforming the index which was up 0.1 percent.

The stock had hit a record 265.3 crowns earlier this year, some 33 percent above its level at the end of 2013. ($1 = 5.3831 Danish Crowns) (Additional reporting by Stine Jacobsen; Editing by Jason Neely and David Holmes)

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