Novo Nordisk cuts profit outlook after weaker sales of weight-loss drug Wegovy

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Novo Nordisk has cut its annual profit expectations after posting weaker-than-expected sales of its weight-loss drug Wegovy, fuelling investor concerns over growing competition and sending its shares lower. The Danish drugmaker’s market value has soared over the past year, making it the most valuable company in Europe, on the back of the success of its obesity and diabetes injections Wegovy and Ozempic, used by celebrities including Elon Musk and Oprah Winfrey. However, the company is facing increasing competition from its US rival Eli Lilly’s drugs Zepbound and Mounjaro. Sales of Wegovy, the first of a new generation of weight-loss drugs known as GLP-1s that mimic a gut hormone to suppress appetite, grew by 55% to 11.66bn Danish kroner (£1.3bn) in the April to June quarter, well below the 13.54bn forecast by analysts. Sales of Ozempic, a diabetes drug based on the same active ingredient as Wegovy, narrowly missed expectations, and overall second-quarter profit was below estimates. For 2024 as a whole, Novo Nordisk cut its operating profit forecast to between 20% and 28%, down from 22% to 30%, excluding currency effects. It raised its sales growth estimate slightly to between 22% and 28%, from 19% to 27%. The chief financial officer, Karsten Munk Knudsen, said that an adjustment of rebates related to estimates the company made on last year’s sales hit sales of Wegovy in the second quarter and described it as a “quarterly blip”. The shares, which have soared 230% over the past three years, fell as much as 7.7% in early trading and were down 3.6% later on Wednesday. However, the boom in demand for weight-loss drugs has outstripped Novo Nordisk’s ability to produce enough of the products. The company said the cuts to forecasts were a result of “expected, continued periodic supply constraints”. Lars Fruergaard Jørgensen, the drugmaker’s chief executive, shrugged off concerns over competition from Eli Lilly. “I don’t see the competitive dynamics, at least for the foreseeable future, really having a big impact on how we drive sales,” he said. Markus Manns, a portfolio manager at Union Investment in Germany, which is a shareholder in Novo Nordisk, said the results were “in sharp contrast to the massive sales and earnings beats we have seen last year”. Sheena Berry, a healthcare analyst at the investment management firm Quilter Cheviot, said: “Ultimately, expectations for Novo Nordisk are high. The obesity story has dominated the narrative in healthcare since the end of the Covid boom and Novo Nordisk and Eli Lilly have been the big winners. “Novo also trades at such a significant premium to peers that it can’t afford messy quarters. But the growth outlook remains impressive, and some of the supply constraints will continue to subside. There is no fundamental issue here, just not a quarter of clean delivery, but investors will watch this closely.” skip past newsletter promotion Sign up to Business Today Free daily newsletter Get set for the working day – we'll point you to all the business news and analysis you need every morning Enter your email address Sign up Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion Eli Lilly will report its second-quarter results on Thursday. Its diabetes treatment tirzepatide, marketed as Mounjaro, was approved for obesity at the beginning of this month, giving patients and doctors what the medical regulator said was a more effective alternative to semaglutide, better known as Wegovy. Novo Nordisk is working on new drugs such as CagriSema, a combination therapy in late-stage clinical trials that will compare it with the efficacy and safety of Eli Lilly’s Zepbound. Both companies have struggled to keep up with the runaway demand for their drugs, and Novo Nordisk is trying to scale up manufacturing capacity by building or acquiring new manufacturing sites. Competition in the obesity drug market is heating up. Last month, the Swiss drugmaker Roche released positive results in an early-stage trial of a once-daily obesity pill. Wegovy was approved in China in June. Novo Nordisk said it had withdrawn its submission to US and European regulators for approval of Wegovy for treatment of heart failure and kidney disease and plans to resubmit with additional data at the start of next year.