COPENHAGEN (Reuters) - Diabetes drug maker Novo Nordisk raised its full-year earnings outlook slightly on Thursday as it managed to offset stagnant sales with cost cuts during the coronavirus crisis.
The Danish company, whose shares rose 1%, said second quarter sales were hit by fewer patients starting treatments as well as coronavirus-related destocking, after its first quarter was boosted by a surge in demand for medicines.
“Despite COVID-19, we are satisfied by the performance in the first half of 2020 and by the progress made on our strategic aspirations,” CEO Lars Fruergaard Jorgensen said in a statement.
Novo said it now expects annual operating profit growth in the range of 2%-5%, up from an earlier estimate of 1%-5% growth.
Novo’s operating profit was 13.8 billion Danish crowns ($2.19 billion), compared to an average 13.31 billion expected by analysts.
This was helped by lower costs, chief financial officer Karsten Munk Knudsen told reporters, which were achieved through less travel and promotional expenses, netting Novo savings of around 1 billion crowns.
But Knudsen said reversals of bulked up inventories, worth 2 billion crowns, would continue into 2021.
At 30 billion crowns, Novo’s sales were flat compared to the same period last year and were below analyst estimates of 30.7 billion crowns. They dropped from 33.9 billion reported for the first quarter of 2020.
Sales in the U.S., Novo’s largest single market, grew 1% compared to 12% in the rest of the world. Novo hopes to gradually replace its U.S. insulin business with its new GLP-1 diabetes drugs, which imitate an intestinal hormone that stimulates the production of insulin.
“The weight of U.S. insulin becomes smaller and smaller in our business, so gradually we’ll also expect to get back to growth in the U.S.” Jorgensen said.
Sales of GLP-1 products in the first half of 2020 rose by 30% globally, while insulin sales slid 3%.
Reporting by Nikolaj Skydsgaard; Editing by Shri Navaratnam, Edmund Blair and Alexander Smith