How Novo’s Diabetes and Obesity Care Segment Performed in 4Q15
Novo Nordisk Stock Fell 6% after 4Q15 Earnings Release
Continued growth momentum for diabetes and obesity care drugs
Novo Nordisk (NVO) led the global diabetic market by continuously launching innovative and better offerings. It operates in two business segments:
diabetes and obesity care
biopharmaceuticals
Revenues from the diabetes and obesity care segment rose to 85.6 billion kroner for fiscal 2015, 22% up from the previous year. The segment contributed ~79% to total revenue for fiscal 2015. To better understand Novo’s business model, please refer to Novo Nordisk’s Business Model: An Overview.
The graph above details total revenue distribution across the globe and how major revenue still flows from the US.
Performance of diabetes and obesity care portfolio
Diabetes and obesity care drugs include new generation insulin, modern insulin, human insulin, Victoza, which is a glucagon-like peptide-1 (or GLP-1) class drug, as well as other diabetes and obesity care products.
New generation insulin, modern insulin, and GLP-1 class drugs are major drivers for sales growth. Key products for Novo in the segment are Tresiba, Victoza, Xultophy, Levemir, NovoLog, and NovoRapid.
The graph above depicts sales growth observed for the diabetes care segment as per its drug class. These key products compete with drugs from Sanofi (SNY), AstraZeneca (AZN), and Eli Lilly (LLY) for market share. Levemir faces competition from Sanofi’s Toujeo, whereas Victoza’s competitors include Eli Lilly’s Trulicity and AstraZeneca’s Byetta and Bydureon.
Anti-obesity drug Saxenda reports positive uptake
Other diabetes and obesity care products earned 4.7 billion kroner, a 16% jump during 2015. Major revenue contributors for the segment were NovoNorm, needles, and Saxenda. Needles sales fell in North America and Europe. However, the strong uptake of Saxenda has partially offset the decline.
The graph above indicates the prescription volume for Saxenda. The rising number of prescriptions for Saxenda indicates the drug’s strong market share. Though the anti-obesity market seems to be smaller in size, it is growing significantly. Saxenda is the only glucagon-like peptide-1 (or GLP-1) receptor agonist that is approved as an anti-obesity drug. The drug is available in the US, Canada, Denmark, and Italy.
To diversify the risk of investing directly in Novo Nordisk, investors can look for options such as the PowerShares International Dividend Achievers Portfolio (PID). PID holds 0.52% of its total holdings in Novo Nordisk.
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