Danish pharmaceutical company Novo Nordisk A/S (NOVO-B.KO) Wednesday raised its financial guidance for 2010 and said it expects continued growth in 2011, as it posted a rise in third-quarter earnings, driven by strong sales of diabetes treatments.

Novo Nordisk said it now expects 2010 sales growth of 11%-12% and operating profit growth of more than 15% in local currencies compared with 2009. It previously expected sales growth of 9%-10% and operating profit growth of 12%-15% in local currencies.

The "preliminary plans" for 2011 indicate sales growth of close to 10% and operating profit growth of 10%-15% in local currencies, it said.

Growth in 2011 will be boosted by strong penetration of modern insulins and continued roll-out of new diabetes treatment Victoza, Novo Nordisk said. But it also predicted generic competition to oral antidiabetic products and negatively impact from healthcare reforms in its markets.

Due to the various risk factors, the preliminary guidance for 2011 is relatively cautious, Chief Executive Lars Rebien Sorensen said on a conference call after the report.

Novo Nordisk hasn't discussed its dividend policy for 2011 with the board, but expects a payout ratio of at least 40% and will also discuss the scope of a new share buyback program, said Chief Financial Officer Jesper Brandgaard.

The Copenhagen-based company posted net profit for the three months to Sept. 30 of 3.59 billion Danish kroner ($665 million), up from DKK2.76 billion a year earlier and slightly ahead of analysts' expectations for DKK3.36 billion.

Novo Nordisk said its drug candidate Degludec showed good blood sugar control in a recent study where it was compared with diabetes treatment NovoMix.

Investors have big hopes for the drug candidate, which according to earlier studies controls blood sugar in a stable and predictable way, and might boost earnings following a planned launch in 2013.

It also said new study data for Victoza indicates that the drug can effectively help obese people lose weight.

Novo Nordisk's earnings have grown steadily, driven by rising sales of diabetes treatments like insulins as well as the recently-launched Victoza, which belongs to the GLP-1 analogue drug class and compared with insulin doesn't risk pushing blood sugar too low.

That drug looks set to gain a strong position in its market segment after U.S. regulators last week demanded additional studies before approving the rival treatment Bydureon from Eli Lilly & Co (LLY), Amylin Pharmaceuticals Inc. (AMLN) and Alkermes Inc. (ALKS).

Victoza generated sales of DKK700 million in the third quarter, up from DKK28 million a year earlier.

Total third-quarter sales rose 25% to DKK15.58 billion, ahead of expectations for DKK14.79 billion.

Still, market participants say Novo Nordisk faces rising generic competition over coming years.

Its shares were hit earlier this month after drug maker Pfizer Inc (PFE) bought the rights to commercialize a set of biosimilar diabetes treatments--similar but not identical versions of existing drugs--from India's Biocon Ltd. (532523.BY).

Novo Nordisk may see growing competition from biosimilar modern insulins in coming years but will meet that threat by continuing to develop new more efficient diabetes drugs, like Degludec, CFO Brandgaard told Dow Jones Newswires.

Victoza was the main driver of the strong result, said analyst Michael Friis Jorgensen at Alm. Brand, adding that the positive study results for the drug and for Degludec could bode well for future earnings.

The raised 2010 guidance just confirms the market's bullish expectations, but the preliminary outlook for 2011 was surprisingly strong, he said.

At 1215 GMT, shares in Novo Nordisk were up 1.5% at DKK547.00, against a 0.8% rise in the wider Copenhagen market.

-By Gustav Sandstrom, Dow Jones Newswires; +46-8-5451-3099; gustav.sandstrom@dowjones.com
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