May 2, 2024 - Business

Novo Nordisk rides weight loss drug boom as risks mount

Illustration of semaglutide injector pens forming the dollar sign symbol.

Illustration: Shoshana Gordon/Axios

Novo Nordisk, the maker of Ozempic and Wegovy, continues to enjoy booming sales, but supply constraints and pricing concerns are putting pressure on the stock.

Why it matters: The company's weight-loss and diabetes drugs have transformed the Danish drug giant into one of the hottest stocks on the market.

Between the lines: Novo on Thursday reported sales of $9.35 billion in the first quarter, up 22% from a year earlier, as its GLP-1 drugs continue to soar in popularity.

  • Wegovy is now getting 25,000 additional patients every week in the U.S., up from a rate of just 5,000 weekly when 2024 began, CFO Karsten Knudsen said on an earnings call.

Yes, but: Supply constraints are still affecting Ozempic and Wegovy — and the company said those will continue.

  • The company said it expects sales growth of 19%–27% for 2024, about the same as the forecast it released in January: 18%–26%.
  • "Not raising the outlook underscores the uncertainty on the manufacturing capacity ramp," Lee Brown, health care sector global team leader at research firm Third Bridge, tells Axios.

State of play: The company also reported "continued pricing pressure" on diabetes and obesity care products, including lower realized prices on Wegovy, despite demand outstripping supply.

  • Insufficient supply usually means higher prices, but Novo CEO Lars Fruergaard Jørgensen said lower prices reflect the company's effort to reach "more and more patients."

Threat level: While Ozempic and Wegovy enjoy a huge head start in the weight-loss lane, competitors are surging — namely from Eli Lilly with Mounjaro and Zepbound, whose sales are soaring.

  • Others are targeting the market with ferocity owing to the substantial revenue opportunity.
  • Those include a still-under-development treatment by Amgen that may help patients keep weight off after they stop using it.

The impact: Novo's stock closed down 4% on Thursday, though it's still up nearly 20% on the year.

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