Nicolai Haugsted
Investors erase billions from Novo Nordisk after mixed obesity drug update.
Novo Nordisk delivered stronger profit guidance and another solid quarter, but investors quickly found reasons to look elsewhere. Shares slid after concerns emerged over sales of the company’s new weight-loss pill and fresh questions surrounding its next-generation obesity treatment.
The Danish pharmaceutical giant raised its full-year outlook on Tuesday, yet the market reaction suggested expectations had been even higher.
Investors focus on Wegovy pill
Novo now expects a smaller decline in both sales and operating profit than it had previously forecast, reflecting a stronger-than-expected business performance.
Much of the market’s attention, however, centered on the company’s oral version of Wegovy.
According to Reuters, sales of the tablet reached 3.22 billion Danish kroner during the quarter, narrowly missing analysts’ expectations of 3.3 billion kroner. While the difference was small, it appeared enough to cool investor enthusiasm surrounding one of Novo’s most important growth products.
“The only surprise I see is that oral Wegovy was just in line with expectations,” said Markus Manns, portfolio manager at Union Investment.
Analysts noted that investors are increasingly watching whether Novo can defend its position in the oral obesity market as rival Eli Lilly intensifies its marketing efforts.
Strong profits fail to lift the stock
Novo reported adjusted operating profit of 33.4 billion Danish kroner for the second quarter, an 11% increase from a year earlier and comfortably ahead of analysts’ forecasts.
Despite the strong earnings, Novo’s U.S.-listed shares fell around six percent after the results.
Several analysts suggested the decline reflected more than the slight Wegovy sales miss. Investors are also weighing the company’s long-term pipeline as competition in the obesity market accelerates.
Attention also turned to CagriSema, Novo’s next-generation obesity and diabetes treatment.
New trial data showed the experimental drug matched Eli Lilly’s competing treatment on weight loss but failed to outperform it in controlling blood sugar levels among patients with type 2 diabetes.
“They are confirming this non-inferiority … which really just means that it’s no better than Lilly’s products,” said Jyske Bank analyst Henrik Hallengreen Laustsen.
Analysts said the findings reinforced concerns that Novo has yet to demonstrate a clear advantage over its biggest competitor.
Race with Lilly continues
Chief executive Mike Doustdar has spent the past year attempting to regain momentum after slowing sales growth and a sharp decline in Novo’s market value. Alongside cost-cutting measures, the company has placed significant emphasis on expanding sales of oral Wegovy while continuing to develop its next generation of obesity treatments.
Industry analysts expect the global obesity drug market to exceed $100 billion annually by the end of the decade, leaving Novo and Eli Lilly locked in an increasingly intense battle for market leadership.
Recent results have reassured investors that Novo’s current business remains highly profitable, but attention is increasingly shifting toward whether the company can produce the next blockbuster medicine before patents on semaglutide-based products eventually begin to expire.
