Novo Nordisk AS (NVO) shares rose the most in more than three months Wednesday after the world's leading market of diabetes medicines posted stronger-than-expected first half profits and boosted its foreign-currency sales forecasts for the full year.
The group said operating profit for the six months ending in June rose 8% to Dkk 26.88 billion ($4.25 billion), topping analysts' forecasts, while sales advanced 4% to just over Dkk57 billion. Novo Nordisk said that, despite an anticipated slowdown in U.S. sales next year, linked in part to lower rebates for diabetes treatments, it sees second half sales, on a local currency basis, to rise between 1% and 3%, a slightly firmer guidance than the group provided earlier this year.
"We are well on track to deliver on our targets for 2017 based on sales growth driven by our new, innovative products within diabetes and obesity care and a continued focus on cost control," said CEO Lars Fruergaard Jorgensen. "Although the formulary negotiations in the USA reflect the tough competitive environment, we remain confident that our long-term financial growth targets are achievable."
Novo Nordisk's top-selling drug, an injectable prescription medicine to treat Type-2 diabetes known as Victoza, recorded an 18% gain in sales on a local currency basis, the company said, taking the first half total to Dkk11.525 billion. The group's total suite of insulin sales rose 6% from the first half of last year to Dkk 32.7 billion, the company said.
However, the company also noted that, "for 2018, formulary negotiations with Pharmacy Benefit Managers and managed care organisations in the USA are progressing. Subject to the final outcome of these negotiations, average prices after rebates are expected to be lower compared with the levels in 2017, predominantly driven by the basal insulin segment."
"The market access for Novo Nordisk's key products is, however, expected to remain broadly unchanged compared to 2017," the company added.
Novo Nordisk shares were marked 3.65% higher in early Wednesday trading, the biggest single-day jump since May 3, to change hands at Dkk 271.6 each, taking their year-to-date gain to around 6.6%.
More of What's Trending on TheStreet: