COPENHAGEN (Reuters) - Novo Nordisk, the world’s largest insulin producer, raised its 2014 outlook by less than investors had hoped for saying it expected sales to be hit by contract losses in the United States and competition from cheaper generic drugs.
The Danish company also promoted head of sales and production Kaare Schultz to chief operating officer, a role that puts him in the running to succeed 59-year-old Chief Executive Lars Rebien Sorensen whose contract ends in 2019.
Novo Nordisk said on Thursday that it now expected sales to grow by 8-11 percent, below its average 13 percent growth rate over the last ten years.
It forecast operating profit to grow by around 10 percent in local currencies. Both outlooks were raised from an October forecast of ‘high single-digit growth’.
Novo, which competes with Sanofi and Eli Lilly & Co, aims to increase the number of people that use its drugs to 40 million in 2020 from 23 million in 2012, as the world faces an epidemic of type 2 diabetes linked to over-eating and lack of exercise.
Chief Financial Officer Jesper Brandgaard said 2014 sales would be hit by competition from copycat versions of its Prandin diabetes drug and the loss of two contracts with U.S. pharmacy group Express Scripts Holding Co, which was announced in September.
Those two factors are expected to reduce global sales by 1 percentage point each, Brandgaard said.
He said there was also uncertainty about the development of its smaller biopharmaceuticals business, without elaborating.
Novo expects 2014 sales of between 87.33 billion and 89.84 billion Danish crowns ($16.4 billion), below analysts’ average forecast of 90.31 billion crowns.
Alm. Brand Bank analyst Michael Friis Jorgensen said he expected Novo to upgrade its outlook during the year.
“It is disappointing that they do not raise EBIT guidance for 2014 further,” Jorgensen said. “But it is no catastrophe”.
The company raised its 2013 guidance three times.
CEO Sorensen, who has been in the job since 2000 and is due to step down some time before his 65th birthday, said no decision had been made about his succession. “No crown prince title has been issued yet, and my departure is not imminent” he said.
Operating profit fell to 7.
Sales rose 4 percent to 21.70 billion crowns, missing an average forecast of 22.11 billion.
Novo’s board proposed a dividend of 4.5 crowns per share and a 12-month share buyback programme of up to 15 billion crowns.
Shares in Novo Nordisk were 0.4 percent higher at 0951 GMT, while the Danish benchmark index was up 0.9 percent.
Novo’s shares have risen 2.5 percent since the start of the year, outperforming a 0.9 percent fall in the European Healthcare Index.
($1 = 5.4691 Danish crowns)
Editing by Erica Billingham