Novo Nordisk Cuts Guidance Amid Tough US Market, Despite 3Q Profit Beat

By Dominic Chopping

Danish pharmaceutical company Novo Nordisk A/S (NOVO-B.KO) on Friday reported a forecast-beating 17% rise in third-quarter net profit, driven by strong sales of its diabetes and obesity drugs, but cut its long-term guidance and narrowed its sales and operating profit outlook for 2016 due to a difficult U.S. market.

"Since February 2016, the market environment in the USA within both diabetes care and biopharmaceuticals has become significantly more challenging, negatively impacting future pricing for Novo Nordisk's products, especially for insulin and human growth hormone products," the company said.

It now expects 2016 sales growth of 5%-6% from earlier guidance of 5%-7%, and operating profit growth of 5%-7% from 5%-8%, both measured in local currencies.

The preliminary outlook for 2017 indicates low single-digit growth in sales and flat to low single-digit growth in operating profit, in local currencies, it said.

"In terms of long-term financial targets, Novo Nordisk no longer deems it achievable to reach the operating profit growth target of 10% set in February 2016," it said. "As a result, the target has been revised and Novo Nordisk is now aiming for an average operating profit growth of 5%."

In a further move to become more competitive, the pharmaceutical firm said it has revised its R&D strategy and priorities and will not progress its current development projects within oral insulin and combinations involving oral insulin.

Net profit for the three months ended Sept. 30 rose to 9.8 billion Danish kroner ($1.44 billion) from DKK8.38 billion in the same period last year. Analysts polled by FactSet had expected net profit of DKK9.46 billion. Sales rose to DKK27.54 billion from DKK26.79 billion in the year-earlier period, missing analysts' expectations of DKK28.01 billion.

-Write to Dominic Chopping at [e-mail]<mailto:[e-mail]>; Twitter: @domchopping @WSJNordics

(END) Dow Jones Newswires

October 28, 2016 03:09 ET (07:09 GMT)

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