Novo Nordisk's Q2 profit beats estimates, despite stagnating sales

Headline results for the second quarter:

  • Revenue: DKK 30 billion ($4.8 billion; forecasts of DKK 30.7 billion), flat versus the prior year
  • Profit: DKK 10.6 billion ($1.7 billion; forecasts of DKK 10.1 billion), up 11%

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

"Despite COVID-19, we are satisfied by the performance in the first half of 2020," remarked CEO Lars Fruergaard Jørgensen, adding "we saw a strong uptake of our GLP-1 portfolio and we continue to increase our diabetes value market share." However, Novo Nordisk noted that sales were negatively impacted by fewer patients initiating treatment and COVID-19-related destocking.

Chief financial officer Karsten Munk Knudsen explained that profit in the second quarter was helped by lower costs, which were achieved through less travel and promotional expenses, resulting in savings of around DKK 1 billion ($159 million).

Other results:       

  • Diabetes segment: DKK 24 billion ($3.8 billion), up 1%, with declining sales of insulin in the US offset by growth for GLP-1 products, which rose 30% globally
    • Ozempic: DKK 4.8 billion ($763 million), up 106% at constant exchange rates (CER)
    • Victoza: DKK 4.2 billion ($668 million), down 22% at CER
    • Tresiba: DKK 2.2 billion ($350 million), down 14% at CER
    • Levemir: DKK 1.5 billion ($239 million), down 36% at CER
  • Saxenda: DKK 1.3 billion ($207 million), down 11%
  • Biopharmaceuticals: DKK 4.7 billion ($747 million), down 2%
    • NovoSeven: DKK 1.8 billion ($286 million), down 16% at CER, with lower sales in North America partly due to a reduction in elective surgeries and bleedings stemming from COVID-19-related lockdowns

Looking ahead:

Novo Nordisk now expects operating profit to grow this year in the range of 2% to 5% on a constant currency basis, with the lower end of the guidance lifted from a previous estimate of 1%. Meanwhile, full-year sales growth is still predicted to be between 3% and 6%, on a constant currency basis.

The company noted that "the COVID-19 pandemic evolves differently across geographies, but operations are gradually normalising in many markets and the majority of the sales representatives are partially back in the field." However, Knudsen warned that reversals of bulked up inventories, worth DKK 2 billion ($318 million), due to the COVID-19 pandemic would continue into 2021.

Meanwhile, Novo Nordisk said that it hopes to gradually replace its US insulin business with its newer GLP-1 diabetes drugs. "The weight of US insulin becomes smaller and smaller in our business, so gradually we'll also expect to get back to growth in the US," Jørgensen commented.

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