Is Novo Nordisk (NYSE:NVO) a full-fledged pharmaceutical company, or does it fall into that "specialty pharmaceutical" niche? Will the company succeed in expanding beyond diabetes and very specialized hormone/protein therapies? Does anybody care so long as the company delivers double-digit revenue growth and returns on capital that approach 40%?
The Strong Get Stronger in Q1
While some analysts seem to be fretting a bit about a "slowdown" in the insulin business for Novo Nordisk, the fact remains that this is one of the fastest-growing major pharmaceutical companies on the planet. Total revenue rose 15% this quarter, with the diabetes franchise growing 16% and the biopharmaceuticals business up 10%. Within diabetes, insulins grew 8% due to continued growth of the analog platform, while Victoza showed nearly 200% growth and delivered over $200 million in revenue on its way to blockbuster status.
Profitability also improved this quarter. Gross margin slid a bit as the company could not completely offset a drag from foreign currency, but the loss was limited to 20 basis points. Operating income grew 24%, though, as sales, administrative and R&D expenses all grew by mid-single-digit amounts. Although the R&D spend looked a bit light this quarter, it looks like more of a timing issue than any sort of philosophical change.
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