Aug. 7 (Bloomberg) -- Novo Nordisk A/S, the world's biggest insulin maker, said second-quarter profit fell 32 percent from a year earlier, when an asset sale boosted results.

Net income declined to 2.47 billion kroner ($512 million), or 3.96 kroner a share, from 3.65 billion kroner, or 5.71 kroner, the Bagsvaerd, Denmark-based company said today in a statement distributed by Hugin. Analysts had estimated earnings of 2.35 billion kroner.

Analysts anticipated that Novo Nordisk might give an update today on the status of its most-promising new diabetes medicine, liraglutide. Food and Drug Administration regulators evaluating the treatment may require additional studies looking at the potential for side effects that affect the heart, Deutsche Bank analysts said in a note to investors. Such tests could delay approval for 2 to 3 years, analysts led by Brian Bourdot said.

``We expect the focus for investors will now shift to the pending FDA update to regulatory guidance for any cardiovascular outcomes studies requirements,'' the analysts said.

Novo Nordisk shares trading in Copenhagen fell 16 kroner, or 5 percent, to 303 kroner, the biggest decline in more than six months.

``Our anticipation is that there is not a need for a cardiovascular study before approval,'' Novo Chief Financial Officer Jesper Brandgaard said in an interview. ``But the FDA has yet to comment on how it will implement the advice from the panel.''

FDA Panel

A panel of experts recommended last month that the U.S. FDA require drugmakers to conduct long-term trials of new diabetes treatments to determine heart risks. Novo Nordisk sought regulatory approval for liraglutide in May and had expected to begin selling the drug next year.

``If they do, it's really bad news,'' Jack Scannell, analyst at Sanford C. Bernstein & Co., said in a telephone interview. Scannell cut his rating for the stock to ``market perform'' after the panel made its recommendation last month.

The one-daily shot, which stimulates natural insulin production, could raise sales by as much as 20 percent. Novo has started an early-stage trial to see how liraglutide compares with Merck & Co.'s Januvia, which also stimulates natural insulin production.

Bio-Engineered

Demand for bio-engineered insulins such as Novo Nordisk's Levemir and production improvements have enabled the company to raise profitability. The Danish drugmaker forecast sales growth of 11 to 13 percent in the currencies of the countries in which it does business, more than an earlier forecast of 10 to 13 percent.

Operating profit will rise as much as 25 percent, compared with an earlier forecast of slightly more than 20 percent, Novo said. Underlying profit growth will remain around 25 percent.

``The reported guidance upgrade is due to fewer one-offs,'' Ben Yeoh, analyst at Dresdner Kleinwort, said in an e-mail interview. ``The stock was up lots in the last week, so the report didn't quite hit the big expectations.''

Novo Nordisk lowered cost relating to the decision to stop a project to develop an experimental inhaled insulin by 20 percent, to 400 million kroner. The drugmaker canceled the project after Pfizer Inc.'s inhaled Exubera failed to generate expected sales and studies showed the drug increased risks of cancer.

China Plant

A decision to invest in a new insulin filling plant in China has been delayed to the second-half of this year, resulting in higher cash flow, Brandgaard said. Although China has overtaken the U.K. as the company's fourth-largest market, production improvements at an existing facility have enabled Novo to postpone construction, he said. The plant would be similar to a recently built one in Brazil, which cost between $300 million and $350 million.

Novo Nordisk had a one-time gain of 1.4 billion kroner in the year-earlier period after selling its stake in cancer diagnostics company Dako Denmark A/S.

The drugmaker increased its share buyback program by 1 billion kroner, to 17.5 billion kroner. The repurchases will be completed by the end of 2009, as planned, Novo Nordisk said.

To contact the reporter on this story: Frances Schwartzkopff in Copenhagen at fschwartzkop@bloomberg.net

Last Updated: August 7, 2008 11:28 EDT