Novo Nordisk shares fall amid future price pressures warning

Novo Nordisk shares fall amid future price pressures warning
Written by:
Ilona Billington
8th August 2018

Novo Nordisk shares are lower Wednesday, as the Danish drug maker reports sales and profits that were broadly in line with expectations. However, what caught investors’ attention was its outlook – it warned of potential pressures weighing on the prices it can charge for some of its products.

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By 0940 BST, Novo Nordisk shares were 4.88% lower at DKK307.15. The stock has been mainly higher in recent weeks.

Novo Nordisk first-half performance

In it’s H1 2018 earnings update, Novo Nordisk said that total sales fell 5% from a year earlier. However, when looking at the local currency figures, sales grew 4% to DKK54.3 billion.

The Danish pharma company’s net profits, meanwhile, rose by 5% to DKK21.1 billion. Novo Nordisk also said its diluted earnings per share was 7% higher at DKK8.66.

“Sales growth in the first half of 2018 was driven by solid performance of our key innovative products: Victoza®, Tresiba®, Xultophy® and Saxenda®, and the launch of Ozempic® is off to a good start in North America,” said Novo Nordisk president and CEO Lars Fruergaard Jørgensen.

“We are encouraged about the clinical trial results for oral semaglutide and we are looking forward to making the first oral GLP-1 treatment available for people with type 2 diabetes,” he added.

2019 outlook worries

The European drug maker also reaffirmed its outlook for the remainder of 2018.

It said:

  • Sales growth is still expected to be 3-5%, in local currencies.
  • Operating profit growth is still seen at 2-5%, also in local currencies.

It added that the outlook for both those details in Danish kroner, was now for it to be 5% and 7% lower, respectively, than in local currencies.

The main point of concern for investors, though, was the business’s comment on price pressures in its US market.

“For 2019, formulary negotiations with pharmacy benefit managers and managed care organisations in the USA are progressing,” Novo Nordisk said.

“Subject to the final outcome of these negotiations, average prices after rebates are expected to be lower compared with the levels in 2018, predominantly due to basal insulin pricing and changed Medicare Part D coverage gap legislation,” it added.

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