Novo Nordisk (NVO - Free Report) reported first quarter 2013 earnings of $1.94 per American Depository Receipt (ADR), up 32.5% from the year-ago period. Revenues in the first quarter of 2013 increased 14% in local currencies year over year.
All growth rates mentioned below are on a year-over-year and local currency basis.
In the reported quarter, total revenues grew 14% driven by strong sales in North America (up 24%) and International Operations (up 17%). Key sales drivers were modern insulins and Victoza.
Geographically, North America was the largest contributor (68% share of growth) to total revenues followed by International Operations (19%), China (10%) and Europe (6%). Timing of shipments in the US and International Operations had a positive impact on sales growth.
Novo Nordisk’s Diabetes Care segment recorded growth of 15%. Modern insulins generated strong revenues (up 16%) driven by NovoRapid (up 16%) and Levemir (19%). Novo Nordisk's key drug, Victoza, is a once-daily human glucagon-like peptide 1 (GLP-1) analogue approved for improving blood sugar (glucose) levels in adult type II diabetes patients. The drug witnessed sales growth of 36%. Victoza witnessed growth in North America, Europe and International Operations. Protein-related product sales were flat. Oral antidiabetic product sales and human insulins sales were down 3%.
Sales in the Biopharmaceuticals segment of Novo Nordisk increased 12%. Strong sales of Norditropin (up 18%), NovoSeven (up 7%) and other products (up 9%) contributed to the increase.
Modern insulins contributed 50% to total sales growth whereas Victoza contributed 28%.
Novo Nordisk’s research and development (R&D) costs and sales and distribution costs increased 6% and 15%, respectively. Novo Nordisk's efforts to develop its pipeline, primarily the ongoing phase IIIa study on the once-weekly GLP-1 analogue semaglutide and liraglutide in obesity, drove R&D expenses in the reported quarter. Increase in sales and distribution cost was primarily driven by the expansion of the US sales force and costs for the launch of Tresiba in Europe and Japan.
In local currencies, operating profit is expected to grow 10% despite including the impact of significant costs related to the expected launch of Tresiba outside the US, investments in the modern insulins portfolio and Victoza in the US, the expanded US sales force as well as sales and marketing investments in China.
In local currencies, sales growth is expected to be in the range of 9–11%, above the previous expectations of 8–11%. This guidance is mainly driven by robust penetration of modern insulins, steady Victoza growth and sales contribution from Tresiba. These positives are expected to be partly offset by the challenging pricing environment in major markets, generic competition for oral anti-diabetic products, intensifying competition within Diabetes Care as well as Biopharmaceuticals.
Novo Nordisk carries a Zacks Rank #3 (Hold). Currently, companies like Catalyst Pharmaceutical Partners Inc. (CPRX - Free Report) and UCB (UCBJF - Free Report) look more attractive with a Zacks Rank #1 (Strong Buy). AbbVie Inc. (ABBV - Free Report) is also well positioned with a Zacks Rank #2 (Buy).