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Novo Nordisk A/S Q1 2010 Earnings Conference Call

Novo Nordisk A/S Q1 2010 Earnings Conference Call

Novo Nordisk A/S (NVO)

Q1 2010 Earnings Conference Call

April 27, 2010 12:00 pm ET

Executives

Lars Rebien Sørensen - President and CEO

Mads Krogsgaard Thomsen - EVP and CSO

Jesper Brandgaard - EVP and CFO

Analysts

Michael Novod - Handelsbanken Securities

Sachin Jain - Bank of America Merrill Lynch

Jack Scannell - Bernstein Research

Peter Verdult - Morgan Stanley

Jacob Thrane - Standard & Poors

Martin Parkhøi - Danske Bank

Alistair Campbell - Berenberg Bank

Mark Dainty - Citigroup Investment Research

Sebastien Berthon - Exane BNP Paribas

Brian Bourdot - Barclays Capital

Richard Vosser - JPMorgan

Sam Fazeli - Piper Jaffray

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Presentation

Operator

» Novo Nordisk A/S Investor presentation on Victoza® launch and International Operation Transcript
» Novo Nordisk A/S Q4 2009 Earnings Call Transcript
» Novo Nordisk A/S Q1 2010 Earnings Conference Call

Good day and welcome to the Nova Nordisk Quarter One Event Conference Call. For your information, today’s conference is being recorded. At this time, I'd like to turn the conference over to your host Mr. Lars Rebien Sørensen. Please go ahead.

Lars Rebien Sørensen

Thank you very much, welcome to this Nova Nordisk conference call regarding our performance in the first three months of 2010 and outlook for the year. I’m Lars Rebien Sørensen, CEO of Novo Nordisk, and with me I have our Chief Financial Officer, Jesper Brandgaard; Mads Krogsgaard Thomsen, our Chief Science Officer; and, present are also our Investor Relations Officers.

Today's earnings release is available on our home page novonordisk.com, along with the slides that we will be using for this conference call. The conference call is scheduled to last approximately one hour as usual. I would also like to start the presentation as outlined on slide number two. The Q&A will begin in about 20 minutes.

Please turn to slide number three. As always, I need to advise you this call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause the actual results to differ materially from expectations. For further information on the risk factors, please see the earnings release in the slides prepared for this presentation.

Also note that this conference call is being webcast live, and a replay will be made available on the Novo Nordisk's website after the call.

Please turn to slide number four. We’re very satisfied with the performance in the first three months of 2010. In February, Victoza, our once daily human GLP-1 analog was launched in the United States and so far, performance has been encouraging. Victoza also performs well in Europe where it continues to gain market share and expand the GLP-1 class in key markets.

Sales growth in the first three months 2010 was 9%, reported and 11% local currencies. The performance is driven by continued penetration of our modern insulins in all key markets and further support by the launch of Victoza. From a regional perspective, the key growth drivers have been North America, International operations which combine contributed with more than 80% of the sales growth. Within R&D Norditropin FlexPro, a new pre-filled injection pen for growth hormone has been approved and launched in United States.

FlexPro has a unique new dosing mechanism, a user friendly design and an audible click confirming dose delivery all of which we believe will significantly increase convenience for our patients. Degludec and DegludecPlus, two new generation insulins, the ongoing Phase 3 program continues to progress according to plan and with the initiation of seven new studies during the first quarter of 2010.

The last Phase 3a study to be conducted in the United States, even Japan is expected to initiate during the second quarter of this year. During the first quarter, a Phase 1 study of a new oral GLP-1 was also initiated.

Now turning to the financials. Our gross margin improved by 40 basis points to 80.3% during the first quarter of this year which reflects an underlying improvement of 100 basis points in local currencies, operating profits grew 15% reported and around 20% in local currencies. The passage of the US Healthcare Reform and the increased clarity this provides on the future performance has enabled us to raise our guidance for 2010 sales from six to 10 to now seven to 10 growths in local currencies.

On operating profit, due to the passage of the Healthcare Reform and higher than expected non-recurring other operating income license we raised our guidance for 2010 for around 10% to now more than 10% also in local currencies.

Turn to slide number five. Our portfolio of modern insulins continued to show strong performance overall. In the first quarter of 2010, the portfolio of modern insulins was the main growth driver accounting for almost 70% of total sales growth in local currencies. Sales performance reflects the steady, durable penetration of modern insulins into the expanding market. Victoza sales reached DKK 370 million during the first quarter this year. It is however impacted by pipeline filling in the United States of approximately DKK 250 million in connection with the launch in mid February in the US.

Our pharmaceuticals grew 6% reported and 8% in local currencies and here sales of NovoSeven was primary realized in North America and which led to increased sales from treating spontaneous bleeding episodes for congenital inhibitor patients. Room temperature stable version of Recombinant Factor VIIa, NovoSeven RT was launched in Japan in April 2010. The full year sales growth for NovoSeven was expected to be negatively impacted by the loss of the majority of the federal tender for NovoSeven in Russia. Sales of our growth hormone therapy product Norditropin increased 7% in local currencies in the first quarter with North America being the main contributor.

Novo Nordisk remains the second largest company in the global growth hormone market with 25% market share measured by volume.

Turn to the next slide for an update on the regional sales split. In the first three months of this year, all regions constituted to growth measures in local currencies. North America was a main contributor with 68% share of the growth measured in local currencies followed by International operations and Europe contributing 19% and 12% respectively.

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