Novo Nordisk upbeat on new diabetes drug as profit tops forecast

COPENHAGEN (Reuters) - Novo Nordisk NOVOb.CO, the world's biggest maker of diabetes drugs, reported a smaller than expected fall in first-quarter profit and nudged up its full-year forecast as sales of new medicines helped to soften the hit from a weaker U.S. dollar.

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With its traditional insulin treatments facing price pressures in the United States, Novo is pinning its hopes on new obesity medicines and Ozempic, a once-weekly injection for diabetes expected to become its biggest drug.

The initial feedback for Ozempic, known generically as semaglutide, is positive, the Danish company said. Analysts predict it will account for around 20 percent of sales in 2025.

“I think the most important matter is that we have had quite some success in landing contracts with the payers,” said Chief Executive Lars Fruergaard Jorgensen.

Sales of Ozempic are seen reaching at least 1 billion Danish crowns this year, he said. In the first quarter, sales were 69 million crowns, following its February launch in the United States, the world’s biggest drugs market.

Ozempic belongs to a class of treatments known as GLP-1s that stimulate insulin production, the first of which was derived from the venomous bite of North America’s Gila monster lizard. So far, all have been injections, but Novo is also working on a tablet version.

Novo hopes Ozempic will take market share from Eli Lilly's LLY.N one-weekly Trulicity, which has cut into sales of Novo's current top-selling drug, once-daily Victoza.

At 0940 GMT, Novo shares were up 5 percent at 309.1 crowns.

Morgan Stanley analysts described the results and guidance upgrade as “reassuring in the context of U.S. pricing pressure and competitive intensity in the GLP-1 market”.

First-quarter operating profit fell 8 percent to 12.4 billion crowns ($2 billion), hit by the depreciation of the dollar, but beat analysts’ average forecast of 11.8 billion crowns in a Reuters poll.

Novo expects 2018 sales growth of 3-5 percent compared with 2-5 percent previously and operating profit growth of 2-5 percent from 1-5 percent, both in local currencies.

As well as competition in the United States, Novo faces new legislation there aimed at reining in high drug prices. The company forecast that would take 1-2 percent off its 2019 sales.

The recently-passed legislation requires drug firms to cover 70 percent of the funding gap for patients under the Medicare here Part D insurance from 2019, up from around 50 percent now.

High drug prices have been a hot political topic and U.S. President Donald Trump said in January pharmaceutical companies were “getting away with murder”.

“We are far from having solved the affordability problem from patients in the U.S. so I still think there will be policy considerations going on,” Jorgensen said.

($1 = 6.2086 Danish crowns)

Reporting by Stine Jacobsen; Editing by Jacob Gronholt-Pedersen, Louise Heavens and Mark Potter