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Annotated article summary from this weekend's Barron's; receive all our Barron's summaries by signing up here:

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 2006Barron’s Tepid Review of Amylin PharmaceuticalsWikipedia on Insulin Analogs

Novo Nordisk 11 02 2007

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