Novo Nordisk (NVO) Beats On Q2 Earnings, Revenues Miss

Novo Nordisk A/S NVO reported second-quarter 2017 earnings of 59 cents per American Depositary Receipt (ADR) beating the Zacks Consensus Estimate of 56 cents by 5.4%. In fact, the reported earnings were in line with the year ago figure.

Quarterly revenues were up 1.6% year over year (up 3% in local currency) to $4.23 billion. However, reported revenue figure missed the Zacks Consensus Estimate of $4.29 billion.

Novo Nordisk’s share price has increased 23.1% year to date, while the Zacks classified industry’s gain of 10.1%.

Notably, all growth rates mentioned below are on a year-over-year basis and in local currency.

Quarter in Detail

Novo Nordisk operates through two segments – Diabetes and obesity care, and Biopharmaceuticals.

In the reported quarter, the company’s top line was driven by growth in new-generation insulin, Victoza and Saxenda partly offset by Vagifem, modern insulin and human growth disorders. Sales growth in local currencies was driven by both International Operations and North America Operations, growth of 5% and 2%, respectively

The Diabetes and Obesity Care segment recorded sales growth of 8%. While, modern insulin decreased 5%, sales of NovoRapid increased 3%, NovoMix decreased 1% and Levemir decreased 17%. Meanwhile, the company’s key drug, Victoza, witnessed sales growth of 15%. Nevertheless, sales at the Biopharmaceuticals segment declined 15%. Hemophilia sales were up 7%.

Research and development (R&D) expenses were up 2% owing to increased research costs for the early diabetes and obesity portfolio as well as increased development costs for oral semaglutide and other diabetes care development programs. Administrative costs also declined by 3%, mainly due to cost-control initiatives.

Sales and distribution costs decreased by 2%, mainly reflecting lower promotional activities in the U.S. following the Tresiba launch in 2016 and broad cost control initiatives. Additionally, the costs were partly offset by increased sales and distribution costs in International Operations, mainly in Region AAMEO (Africa, Asia, Middle East and Oceania).

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