Novo Nordisk Stock Plummets After Third Outlook Cut This Year
Shares of Novo Nordisk (NVO) fell sharply on Wednesday following the company’s third sales outlook reduction this year. The Danish pharmaceutical firm now anticipates sales growth between 8% and 11%, a decrease from its previous forecast of 8% to 14% made three months earlier. At the end of 2022, Novo had predicted a more ambitious increase of 16% to 24% in sales for 2025.
Quarterly Earnings Results
The updated guidance comes on the heels of disappointing third-quarter performance. Reported sales amounted to approximately $11.54 billion, exhibiting a modest growth of 5% but falling short of expectations set at $11.94 billion, according to FactSet data. Earnings were also disappointing, reported at about 69 cents per share, which represents a significant 26% decline.
Performance of Key Products
- Wegovy: Generated about $3.13 billion in sales, growing nearly 18%, yet missing expectations of $3.33 billion.
- Ozempic: Brought in approximately $4.73 billion, meeting forecasts with a year-over-year increase of 3%.
Challenges and Competition
Chief Financial Officer Karsten Munk Knudsen noted that Novo Nordisk has transitioned from a phase of “hyper growth,” previously enjoying quarterly sales increases of 20% to 40%. He cited intensified market competition as a significant factor in the current slowdown of growth rates for their diabetes and obesity treatments.
Strategies for Market Expansion
To counteract these challenges, Novo Nordisk is focusing on expanding its presence in the cash-pay market by partnering with major retailers like Costco Wholesale and Sam’s Club. Additionally, the company is taking measures against compounders who produce unregulated knockoff versions of its semaglutide products.
Negotiations with Telehealth Providers
In a strategic move, Novo is negotiating an agreement with Hims & Hers Health to sell Wegovy injections through their platform. Earlier this year, a prior deal crumbled due to concerns over Hims’ compounding activities.
Competition with Eli Lilly
Competition in the pharmaceutical sector remains fierce, particularly from Eli Lilly (LLY). Their rival products, Zepbound and Mounjaro, have recorded robust growth, surpassing both Wegovy and Ozempic in sales for two consecutive quarters. Eli Lilly’s stock remains close to its peak, while Novo Nordisk’s shares have plummeted more than 68% from their June 2024 highs.
Future Outlook and Acquisitions
Despite these setbacks, Novo is not slowing down. The firm is on the verge of launching an oral version of Wegovy, marking a significant innovation in the GLP-1 drug market. Furthermore, it is actively working to acquire Metsera, a company specializing in GLP-1 mimickers that may offer competitive advantages. Novo recently increased its bid for Metsera to $10 billion while Pfizer has proposed up to $8.1 billion.
The competitive landscape suggests an ongoing battle not just for market share, but for innovation in the rapidly growing diabetes and obesity treatment sectors. As the dynamics shift, stakeholders will be keenly observing how these developments unfold.
