Novo to sell off its NNE engineering unit

Denmark's Novo Nordisk, could be on the verge of selling off its engineering division, if reports in the local business daily Borsen are to be believed.

The company's chief financial officer Jesper Brandgaard told local press that the firm is "considering" divesting NNE Pharmaplan, a leading engineering and consultancy company focused entirely on the pharmaceutical and biotech industries, and employing more than 1,500 people across 22 locations worldwide.

Analysts at Deutsche Bank responded positively to the news, saying non-core divestments often have a beneficial impact on the share price, as was seen with Lundbeck's sale of its Lifecycle Pharma unit and Novo's divestment earlier this year of its 27 per cent stake in cancer diagnostics firm Dako Denmark A/S for DKK1.5bn.

Novo Nordisk is the world's biggest insulin maker, and is concentrating its focus in the field of diabetes and diabetes care as competition intensifies.

NNE acquired Germany's Pharmaplan in December last year from healthcare group Fresenius, and was officially launched as a joint company in April.

NNE Pharmaplan is an independent subsidiary of Novo Nordisk and, in 2006, generated turnover of DKK1.17bn (€157.5m).

But how immediate the sale will be is yet to be established, with Brandgaard telling Bloomberg that it will make a decision once NNE Pharmaplan's operating profit margin reaches five per cent.

This is expected to take around 18 months.

Meanwhile, chief executive Lars Rebien Soerensen - also speaking to Bloomberg - revealed recently that the firm may try and sell its beleaguered hormone replacement therapy division, but confessed a quick sale is "unlikely" with the sector still struggling following the 2002 Women's Health Initiative study showing HRT increased the risk of breast cancer, heart attack and stroke.

Novo is among other companies now facing lawsuits.

"In a market like this that collapses, no one wants to buy a company where there's a looming product liability and very bad public relations," Soerensen told Bloomberg.