Novo Nordisk: Set to Conquer the Insulin Market - Barron's

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TECHNOLOGY TRADER: Biopharma Giant Set to Rule Insulin Market by Bill Alpert

Summary: Novo Nordisk (NVO) is the world sales leader of insulin-related products. Its insulin-analog products are bio-variants of the human insulin molecule that work better, are more bioavailable, sell for twice the price, and enjoy extended patent protection. Together with competitors Eli Lilly and Company (LLY) and sanofi-aventis (SNY), they have converted about 1/2 of all insulin-using patients to make the switch -- and Novo's product is the most complete and convenient. Its 2006 insulin analog sales jumped 50%, driving EPS up 12% and giving it a P/E ratio of 26. Can the company continue to merit such a lofty multiple? Tech trader Bill Alpert says yes. Diabetes 'growth' is widespread; China accounted for over 40% of its international growth last year (though the U.S. government has been slow in accommodating 'biosimilar generics'). The company has other growth opportunities: It has a Phase III drug similar to but better than Amylin Pharmaceuticals Inc.'s (AMLN) Byetta (sold by Lilly) because Novo's version is taken once daily vs. Byetta's twice. And its hemophilia drug NovoSeven promises to reduce severe bleeding in trauma patients and during heart surgery, and may prove to be the first drug to address bleeding strokes.
Related Links: Top Pharma Innovations In 2006 • Barron’s Tepid Review of Amylin Pharmaceuticals • Wikipedia on Insulin Analogs

Comments

[Ravish A]

Novo Nordisk is in the right market: diabetes.

However, I think its growth needs to also come from other sources inorder to sustain it's current level of growth..i would still buy NovoNordisk but I feel it's growth rate may slow mainly because diabetes can be managed well with prevention and the more people understand the disease, there is less need for insulin.