Novo Nordisk Reports Unusual Sales Decline for Obesity Drug Wegovy, According to Reuters

By Maggie Fick

LONDON (Reuters) – Novo Nordisk reduced its full-year profit forecast on Wednesday following quarterly sales of its weight-loss drug Wegovy that fell short of expectations, raising concerns among investors about increasing competition from Eli Lilly.

This marks an end to a lengthy period of favorable earnings reports for Novo, a leader in the obesity medication market, which has seen its valuation surpass $500 billion, making it the most valuable publicly listed company in Europe.

Novo’s shares, which had risen approximately 230% since the introduction of Wegovy in June 2021, dropped as much as 7.7% in early trading and were down 5.8% by 1410 GMT, positioning them among the day’s largest decliners and on track for their most significant one-day decline in two years.

Chief Financial Officer Karsten Munk Knudsen remarked in an interview that the market’s sensitivity to Wegovy’s performance made the negative reaction understandable.

The company also reported second-quarter profits that were below expectations, which contrasted sharply with the substantial sales and earnings gains witnessed last year, noted Markus Manns, a portfolio manager at Union Investment in Germany, a Novo investor.

Novo, like its U.S. counterpart Lilly, is working hard to boost production capabilities to satisfy soaring demand. The obesity drug market is rapidly expanding, with predictions suggesting it could reach a value of around $150 billion by the early 2030s.

Some analysts expressed optimism about Novo’s revised sales forecast, which now estimates growth between 22% and 28% in local currencies, up from a previous estimate of 19% to 27%. They saw this as a positive sign that Wegovy supplies are improving.

However, challenges remain, as U.S. patients on average are using Wegovy for only six months, primarily due to limited availability of the highly sought-after drug.

The company stated it would continue to limit supplies of the lowest dosage of Wegovy in the U.S., where this particular dose remains in short supply, according to the relevant regulatory authority.

In response to growing competition, CEO Lars Fruergaard Jorgensen downplayed concerns over Lilly’s market position, emphasizing that demand currently far outstrips supply.

CFO Knudsen indicated that Wegovy prices in the U.S. are lower this year, influenced by various anticipated factors, including price concessions aimed at improving insurance access.

Wegovy’s sales surged by 53% to 11.66 billion Danish crowns ($1.7 billion), though this was still below the 13.54 billion expected by analysts. Sales of Ozempic, a diabetes medication with the same active ingredient, also fell short of expectations.

In addition, the company faced challenges from higher-than-anticipated rebates, impacting second-quarter sales. Knudsen described this as a “quarterly blip.”

Novo has revised down its operating profit growth forecast for the year to between 20% and 28% in local currencies, from a previous range of 22% to 30%.

The company recently concluded an advanced kidney disease trial, resulting in a 5.7 billion Danish crown impairment loss that affected operating profit.

To meet demand and counteract Lilly, which launched its competing therapy Zepbound in the U.S. last December, Novo is investing heavily in production expansion.

Both companies are competing in several markets, including the U.K. and Germany, but the U.S. market is notably lucrative, with over 70% of adults classed as obese or overweight.

Novo also announced withdrawing its submission for the approval of Wegovy to treat heart failure and kidney disease from U.S. and European regulators, indicating plans to resubmit with more data by early 2025.