COPENHAGEN: Shares in Novo Nordisk fell after sales of some of its key drugs in the second quarter fell short of expectations and it said prices in the key U.S. market would be lower next year.
The world’s top maker of diabetes drugs has entered a period of slower growth partly due to pricing pressure on the U.S. market, which accounts for about half of Novo’s total sales.
U.S. President Donald Trump has made lowering the cost of prescription drugs an issue for his administration and said he would make an announcement next week on reducing prices.
Some drugmakers such as Pfizer Inc and Switzerland’s Novartis have said they would not follow through on planned increases in drug prices.
Novo Nordisk has no plans to follow suit and reverse list price increases announced in July, chief executive Lars Fruergaard Jorgensen told reporters, adding: “Neither do we have plans to raise the prices for the rest of the year”.
The company said that subject to the final outcome of negotiations with organizations who administer drug programmes for employers and health plans, accounting for the bulk of U.S. drug sales, “average prices after rebates are expected to be lower compared with the levels in 2018”.
Drug manufacturers also face new U.S. legislation next year aimed at reining in high drug prices. Novo Nordisk has said that the new rules would cut its 2019 sales by 1-2 percent.
Jorgensen quashed media reports that Novo is considering laying off up to 3,000 in response to the new legislation.
He said Novo was adapting its business on an ongoing basis but declined to provide further details on how it would mitigate the effects from price pressure and new regulation.
Its shares were down 4.5 percent at 0939 GMT, underperforming a flat pan-European STOXX 600, with analysts citing disappointing sales of its Tresiba, Victoza, and Ozempic diabetes drugs.
Sales of its best-selling Victoza drug came in at 11.7 billion Danish crowns ($1.82 billion) in the first six months, undershooting the 12.2 billion expected by analysts. Total group sales in the second quarter came in at 27.4 billion crowns, below market expectations for 27.7 billion.
Quarterly operating profit was 12.2 billion Danish crowns, slightly below an average 12.3 billion crowns forecast in a Reuters poll of analysts.
Novo kept its 2018 outlook for sales growth of 3-5 percent and operating profit growth of 2-5 percent, both measured in local currencies.
But sales and operating profit growth in Danish crowns are now expected to be 5 and 7 percentage points lower than the level in local currency, respectively, compared to a previous guidance of 6 and 9 percentage points.
(Reporting by Stine Jacobsen; Editing by Jacob Gronholt-Pedersen, Jane Merriman and Emelia Sithole-Matarise)