UPDATE 3-Novo Nordisk ups outlook, Q4 EBIT beats consensus

* Q4 EBIT falls to 3.22 bln DKK, above forecast

* Announces bigger-than-expected 7.5 bln share buyback

* Shares fall on profit taking after strong year-to-date

(Adds company, analyst comment, background, updates share)

By Anna Ringstrom and Karin Jensen

COPENHAGEN, Feb 2 (BestGrowthStock) – World No.1 insulin maker Novo
Nordisk (NOVOb.CO: ) posted slightly better quarterly operating
profits than expected as sales of its key modern insulins grew
and raised its 2010 outlook on hopes of better gross margins.

But shares in Novo, which won a belated U.S. approval for its
new-generation potential blockbuster Victoza last week, fell as
investors took profits after big year-to-date gains.

“Rumours of a strong report have also supported the share in
the past week. It’s ‘buy on the rumours, sell on the facts’
today,” said Amagerbanken Chief Trader Soren Sorensen.

Novo forecast operating profit growth of some 10 percent and
sales growth of 6-10 percent this year. Previous guidance was
for more than 5 percent and 5-10 percent respectively in local
currencies — though lower in Danish crowns.

The firm told an analysts conference the profit forecast was
based on sales at the mid-level of the range. [ID:nWEB7770]

“The forecast reflects further improvement of the gross
margin, increased spending for R&D activities … and higher
licence fees and other operating income,” Novo said.

Analysts had seen the previous guidance as moderate, amid
uncertainty around a planned U.S. healthcare reform, and said
the revision had been expected and mostly priced in.

Recent political events indicate the U.S. reform may turn
out less damaging to drugmakers this year than initially feared.
[ID:nN28130768]

“In light of the approval for Victoza in the U.S. and Japan
and against the background of initial expectations, the upgrade
of the (2010 guidance) is quite cautious,” said Stig Nyman,
analyst at Lan & Spar Bank.

Fourth-quarter operating profit fell to 3.22 billion Danish
crowns ($602 mln) from 3.37 billion a year earlier versus a mean
forecast for 3.14 billion in a Reuters poll. [ID:nLDE6101UK]

Some analysts said costs at the Danish firm, which began
rolling out Victoza last year in Europe, had been unexpectedly
high in the quarter. Sales and distribution costs were 32
percent of revenue, research and development costs 18 percent.

The 2009 performance was driven mainly by robust sales
growth at the modern insulins business, although currency
effects weighed on the fourth-quarter result, Chief Executive
Officer Jesper Brandgaard told Reuters.

Modern insulins sales grew 14 percent to 5.7 billion crowns,
nearly half of the group total.

The shares, which hit records last week after the Victoza
news, fell 2.59 percent to 365.00 crowns at 1618 GMT while the
DJ Stoxx European healthcare index (.SXDP: ) was slightly up.

VICTOZA ROLL-OUT

Novo holds roughly half the insulin market measured by
volume in its main markets Europe and fast-growing North
America. North America has the world’s highest prevalence of
diabetes with more than 10 percent of adults affected.

Novo expects sales of Victoza, which belongs to the new
GLP-1 class of drugs that stimulate insulin release when glucose
levels become too high, to surpass $1 billion by 2015.

But the once-daily drug may hit fierce competition from
once-weekly rivals such as the long-acting version Eli Lilly’s
(LLY.N: ) and Amylin Pharmaceuticals’s (AMLN.O: ) Byetta, which U.S.
health authorities may approve in March.

U.S. sales of the drug could also be dented by a cancer
safety warning called for by the U.S. Food and Drug
Administration. [ID:nLDE5BK0R6]

Analysts at Jefferies International said Novo has one of the
best businesses in its sector but that the market is still
looking for “unrealistically high peak sales for Victoza”
because of the cancer warning and daily injection profile.

Victoza has been launched in nine European countries. Novo
plans to launch it in the U.S. in coming weeks and in Japan in
the first half of 2010.

Novo, which has flagged the roll-out would be costly, said
the launch in Europe had been “very encouraging”.

Brandgaard warned costs would outweigh earnings from Victoza
in the U.S. this year: “With regards to operating profit we will
spend more money in the United States than sales will bring in.”

Novo proposed a dividend of 7.5 crowns per share for 2009, a
25 percent rise, and announced a bigger-than-expected share
buyback programme of 7.5 billion crowns during 2010.

Stock Investing

(Additional reporting by Peter Levring, Ben Hirschler and Peter
Starck; Editing by Mike Nesbit and Sharon Lindores)
($1=5.352 Danish crowns)

UPDATE 3-Novo Nordisk ups outlook, Q4 EBIT beats consensus