Novo Nordisk DKK 9bn CapEx in 2019 ‘higher than expected’

Novo Nordisk spent $1.5 billion on CapEx in 2018 and expects to pay a further $1.4 billion in 2019 driven by investment in drug substance at its North Carolina site.

Danish drugmaker Novo Nordisk had a flat year in 2018, pulling in sales of DKK 112 billion ($17 billion). Net profit remained relatively constant too, with the firm reporting DKK 39 billion ($6 billion).

According to CFO Karsten Munk Knudsen, “manufacturing had a fantastic year in 2018. He told stakeholder: “We really hit it on all cylinders,” though noted that is not something that can be planned for every year.

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Increased CapEx

During the year, the firm spent DKK 9.5 billion ($1.5 billion) in capital expenditure to bolster its property, plants and equipment, and according to the firm’s guidance a similar amount – DKK 9 billion – will be spent in 2019. This is a considerably higher level than Novo Nordisk predicted at its 2017 Capital Markets Day.

“Things are changing all time and we are spending more on CapEx in 2019 than what we anticipated,” CFO Karsten Munk Knudsen told investors on a conference call.

“The main driver is, of course, our API [active pharmaceutical ingredient] investment in North Carolina that is our biggest CapEx project these days, where we are roughly 50% done.”

The 833,000 square-foot facility in Clayton, North Carolina will produce the drug substance for a range of Novo Nordisk’s current and future GLP-1 and insulin medicines, once operational in 2020. The site was commissioned in 2015 at a cost of $2 billion.

Last year the firm pumped $87 million into a nearby diabetes drug fill and finish plant to support the drug substance plant.

The firm is also expanding its Danish facilities, including building a diabetes filling capacity in Hillerød and upping manufacturing capacity for biopharmaceutical products in Kalundborg.

Once these are complete, Munk Knudsen said CapEx will decrease. “You should see this as a phasing off of investments and you should expect our level of CapEx to go down after 2019, so 2020 and onwards.”