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DRUGS & PHARMACROPS: Novo Nordisk profits from high GE insulinprices in the U.S.



------------------------------- GENET-news -------------------------------
TITLE:  Novo Nordisk says profit rises 41% on insulin sales
SOURCE: Bloomberg, USA
AUTHOR: Frances Schwartzkopff
URL:    http://www.bloomberg.com/apps/news?
pid=20601085&sid=aGaN.NoZiau0&refer=europe
DATE:   02.05.2007
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Novo Nordisk says profit rises 41% on insulin sales

May 2 (Bloomberg) -- Novo Nordisk A/S, the world's largest maker of
insulin, said first-quarter profit climbed 41 percent on rising sales of
engineered versions of the protein. The shares were among the biggest
gainers in Europe.

Net income jumped to 1.71 billion kroner ($312 million) from 1.21
billion kroner a year earlier, the Bagsvaerd, Denmark-based company said
today. Profit beat the 1.63 billion kroner estimate of 23 analysts
surveyed by SME Direkt. Sales rose 10 percent, to 9.8 billion.

The switch among diabetics to insulin analogues such as Novo Nordisk's
24-hour treatment Levemir boosted profit growth. The analogues, which
are genetically redesigned human insulin, cost more and are patent-
protected. Their sales rose 32 percent while revenue for conventional
insulin dropped 4 percent. The company also upgraded its guidance for
operating profit reported in the currencies of the countries in which it
sells products.

"The underlying performance remains strong," said David Seemungal, an
analyst at Standard & Poor's in London.

Novo Nordisk shares rose 41 kroner, or 7.6 percent, to 579 kroner in
Copenhagen. The stock has gained 23 percent since the beginning of the year.

Insulin analogues sell at a premium over conventional insulin of 5
percent to 10 percent in Japan, 30 percent in Europe, and two to three
times as much in the U.S., Jesper Brandgaard, the company's chief
financial officer, said in a telephone interview. The switch to
analogues, particularly in the U.S., helped reduce the impact of
declining prices for drugs in Europe and Japan, he said.


Insulin

Levemir, which competes against Sanofi-Aventis's Lantus, had a share of
the U.S. basal insulin analogue market of 7 percent one year after its
launch, Brandgaard said. Basal insulin helps keep the level of sugar in
diabetics' blood steady over the course of a day.

The company had aimed for a market share of between 5 percent and 10
percent, though in the last few months, monthly sales increases haven't
topped 0.5 percent, Brandgaard said. A boost in the U.S. sales force of
700, to 1,900 should remedy that by the end of the year, he said.

Operating profit for 2007 will rise more than 15 percent this year in
local currencies, Novo Nordisk said. The company forecast a sales gain
of more than 10 percent. Last year, it reported an operating profit of
9.2 billion and sales of 38.7 billion kroner.


Currency Strengthens

Novo Nordisk cut its operating profit forecast in krone for a second
time this year, citing a strengthening of the currency. Operating profit
will rise between 6 percent and 8 percent, according to the new
estimate. In January, Novo Nordisk forecast a gain of 10 percent, and
three months earlier, it had guided to growth of 10 percent to 15 percent.

"It's a much more difficult operating environment for Novo Nordisk,"
Seemungal said. "Their cost-base is in Denmark but so much of earnings
come from elsewhere, especially the U.S."

The krone has gained 6 percent against the U.S. dollar over the past six
months, trading at 5.49 kroner to $1 today compared with 5.84 kroner on
Oct. 1, according to Bloomberg data.

Helping offset the currency effect was one-time revenue of 138 million
kroner from licensing out an oral diabetes treatment as part of a shift
to biopharmaceutical drugs, and a near tripling of profit from financial
transactions, including foreign currency hedging, the report shows.

"Hedging gains are providing some offset to currency headwinds," said
Brian Bourdot, an analyst at UBS in London.


Rebates, Taxes

In the U.S., Novo Nordisk also raised list prices and negotiated smaller
rebates with health-maintenance organizations, Brandgaard said. The
company also is benefiting from the government's decision to move
patients onto Medicare, which has higher reimbursement levels than
Medicaid, he said.

Novo Nordisk raised its guidance for financial income this year to 1.8
billion kroner from 50 million kroner, largely as a result of selling a
27 percent stake in Dako A/S, a Danish cancer diagnostics company.

The effective tax rate for 2007 will fall to 25 percent from 28 percent
for this year because of the sale, the company said. A proposal by
Danish lawmakers may reduce taxes further, according to Novo Nordisk.


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