Novo Nordisk has revealed its fourth quarter report, posting a surprise increase in sales for the quarter but forecasted pricing pressure on its insulin products could hurt overall growth this year.
Novo reported a net profit of 8.72bn Danish Kroner ($1.2bn) in the quarter, up from DKK8.5bn last year. Its operating profit was slightly below expectations, with the reported DKK11.9bn ($1.75bn) coming beneath the expected DKK12bn forecasted by analysts.
The Danish pharma’s sales revenues did, however, beat out analyst expectations, coming in at DKK32.42 against forecasts of DKK31.95bn.
The sales growth was supported by increased sales of new products in its diabetes and obesity franchise, as well as its biopharm business.
This included a boost from GLP-1 agonist Ozempic (semaglutide) which has been climbing solidly since its launch, as demand increases for the drug. Sales of the drug reached DKK11.2bn ($1.6bn), up from DKK1.8bn last year.
Novo also reported sales of DKK50m for its recently launched oral semaglutide product Rybelsus in the quarter – the company has said it is encouraged by the early performance of the drug, and expects more growth over the coming year.
Although sales of its newer drugs have been growing, Novo has been facing challenges to its insulin franchise – in particular in the US, where prices of these products have been heavily scrutinised. Sales in Novo’s insulin franchise have flat-lined as sales of its newer products were off-set by pricing pressure on its older products, such as Levemir (insulin detemir).
Along with other insulin manufacturers, including Sanofi and Eli Lilly, Novo has launched cut-price versions of its insulin products, as criticism over its prices continue to amplify.
The reductions come after the average wholesale price of four of the most popular insulins more than tripled between 2007 and 2017. This prompted the US government to look into ways to reduce costs, including most recently the possibility of importing insulin and other drugs from countries such as Canada.
“We see a tough environment in the US insulin market going into 2020,” said Novo’s chief financial officer Karsten Munk Knudsen on a conference call.
For Novo, this pressure has been reflected in its adjusted operating profit growth prediction for the full year, which it has forecast as being at 1% to 5%.
Sales growth, however, is expected to be 3%-6%, reflecting the anticipated continued success of its newer products. Compared to last year, both sales and operating profit grew by 6%, demonstrating a small drop to be expected in 2020.
“We are very satisfied with the financial performance in 2019. The results reflect an accelerated sales growth in International Operations and a strong launch of Ozempic in particular in North America Operations and Region Europe,” said Novo’s president and CEO Lars Fruergaard Jørgensen.
“The Rybelsus launch in the US is off to a good start, and we are pleased with the CV label indication for Ozempic in the US, and the EU recommendation to approve Rybelsus, all for the benefit of patients,” he added.