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Danish pharmaceutical group Novo Nordisk posted better-than-expected second quarter operating profit on Wednesday, beating analysts’ estimates, at the same time lifting its growth outlook for the whole year in hopes of strong sales.  

Novo Nordisk reported that operating income for the six months ending in June, grew 8 percent to kr26.9 billion ($4.24 billion), while its net profit added 4 percent to kr20.1 billion ($3.2 billion). Diluted earnings per share (EPS) edged higher by 6 percent to kr8.07.

Sales of the Denmark-based company also increased as much as 11 percent to kr47.5 billion ($7.4 billion), driven by its new diabetes and obesity drugs, but its sales within biopharmaceuticals slipped 19 percent to kr9.6 billion ($1.5 billion) due to rebate adjustments and competition from generic drugs.

Novo Nordisk’s chief executive Lars Fruergaard Jørgensen stated that they are on the right track to achieve their goals for 2017 based on sales growth through their new revolutionary products within diabetes and obesity care, and continued focus on price management.

He added that despite the formulary negotiations in the US showed a tough competitive environment, they are still positive that they would be able to accomplish their long-term financial expansion targets.

The company believes that the tough trading conditions in the US, such as lower prices, generic products and rising competition and poor economic state in a number of international markets would keep the level of growth under control.  

Moreover, the company stated that for 2018, negotiations with Pharmacy Benefit Managers and managed care organizations in the US are moving ahead.

Novo Nordisk’s top-selling medicine to treat type-2 diabetes, Victoza, generated 18 percent in sales, taking the first half total to kr11.5 billion ($1.8 billion). Sales in insulin climbed as well by 6 percent from the first half of last year to kr32.7 billion.

However, some investors worry that the prices for such drugs will go through the same pressure as insulin.

Novo Nordisk’s Board of Directors has also given their consent for this year’s interim dividend of kr3.00 per share of kr0.20, which will be paid this month.    

Forecast

Novo Nordisk stated that even with a possible slowdown in US sales next year, because of lower rebates for diabetes treatments; the company now expects its second half sales in local currencies to rise 1 percent to 3 percent, rather than zero to 3 percent.

Operating profit was also adjusted from the previous range of -1 to 3 percent to 1 to 5 percent.

As a result of a decline in the US dollar and other currencies, the pharmaceutical group has lowered its guidance in the Danish crown by 3 to 4 percent, instead of a 1 percent boost.

Jørgensen also said that average prices following rebates are expected to fall, largely driven by the basal insulin sector, but did not say how much prices were estimated to decline, while market access for Novo Nordisk’s main products is likely to remain mostly the same.

Following a positive second quarter earnings report, Novo Nordisk’s stock gained as much as 5.1 percent to kr275.2 on Wednesday.

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