Novo Nordisk’s share price rises with a bright outlook

Copenhagen — Novo Nordisk’s share price rose more than 3% on Wednesday after a Danish pharmaceutical company announced a higher-than-expected earnings outlook for 2022, despite falling below its fourth-quarter operating margin forecast.

The world’s largest diabetes drug developer expects to generate 6% to 10% sales growth in local currency and 4% to 8% operating profit growth in 2022.

“This reflects the unchanging positive growth momentum that underlies Novo Nordisk,” Sidbank analyst Soren Rontoft told Reuters, adding that he would raise estimates.

Jeffreys analysts said Novo’s operating margin forecast reflects lower margin pressure than feared.

Novo’s fourth-quarter operating margin was DKK 13.63 billion ($ 2.06 billion), an increase of 16% over the same period last year, but below the average of 14.36 billion predicted by analysts in a Refinitiv study.

In addition to higher R & D costs, higher sales and distribution costs have affected the results, Rontoft said.

“It probably reflects a more normalized world, with a lack of restrictions and an increase in COVID-19, which has led to higher marketing spending,” he added.

However, fourth-quarter sales were 38.3 billion crowns, surpassing analysts’ estimated 37.9 billion crowns. This is due to sales of the new diabetes drug Ozempic, which increased 64% in 2021 to reach 33.7 billion.

Overcoming supply problems

After being launched on the US market in June, Novo was overwhelmed by demand for Wegovy obesity drugs, leading to a product shortage.

In December, contract manufacturers temporarily suspended delivery and manufacturing after a problem related to Good Manufacturing Practices.

“Since December, we’ve been working hard to optimize our internal capabilities,” CEO Lars Jorgensen told reporters Wednesday.

“As a result, internal capacity in the first half of 2022 is expected to approach the demand for about 20,000 scripts per week, as seen in the US market at the end of 2021,” Joergensen added.

Supply issues impacted sales of obesity treatments in the fourth quarter, falling short of analysts’ expectations despite 55% sales growth.

Novo Nordisk’s share price rose 3.5% at Greenwich Mean Time 0829.

($ 1 = 6.6023 Danish krone)

By Nikolaj Skydsgaard