Novo Nordisk's recent quarterly performance and an improved full-year outlook failed to quell Wall Street's persistent concerns regarding the Danish pharmaceutical giant's future growth trajectory in the highly competitive obesity market. Despite beating expectations and raising guidance, the company faces ongoing scrutiny over its long-term pipeline, especially as rival Eli Lilly continues to gain significant market share with its blockbuster weight-loss drugs.
Analysts attributed the better-than-expected quarter to temporary factors like rebate adjustments, with obesity drug sales meeting general expectations. However, the oral version of Wegovy slightly missed forecasts. Adding to the investor unease, Novo Nordisk disclosed another mixed clinical result for its next-generation weight-loss drug, CagriSema, raising further questions about the company's ability to sustain its dominance beyond current offerings.
"Overall nothing to inspire," commented Citi analysts, while Jefferies noted that the raised guidance offered limited room for upward revision of consensus sales estimates.
Novo Nordisk, whose shares in Copenhagen fell as much as 5% before paring losses to trade 3.4% lower, revised its full-year outlook. The company now anticipates adjusted sales and operating profit to range from a 6% decline to flat at constant exchange rates, an upgrade from its previous forecast of a 4% to 12% decrease.
In after-hours trading on Tuesday, Novo's American depositary receipts dropped 6% following the early release of its quarterly report.
The company's stock performance highlights the broader market dynamics, with charts indicating that Eli Lilly's shares have notably outperformed Novo Nordisk's American depositary receipts over the past 12 months. This competitive pressure is intensifying as Eli Lilly's Zepbound and Mounjaro have captured substantial market share, launching years after Novo Nordisk's initial entries.
Novo Nordisk is actively working to rebuild investor confidence in its pipeline and execution capabilities, particularly within the challenging U.S. market. The company's Danish shares had experienced a year-to-date decline of approximately 5% and were down nearly 70% from their mid-2024 peak, though they have shown some recovery this year following the successful introduction of the Wegovy pill.
The improved outlook is largely driven by heightened expectations for GLP-1 product sales, particularly the Wegovy portfolio, which encompasses both injectable and oral formulations. The Wegovy pill has achieved over 5 million prescriptions since its launch. Additionally, encouraging early uptake has been observed in international markets, alongside the rollout of a newly approved higher dose of injectable Wegovy.
Highlighting the dynamic nature of the market, one executive noted, "I could see a future where actually this market is, to a large extent, a pill market." He emphasized the rapid adoption of the Wegovy pill, stating, "The fine detail is that [the] first 1 million prescriptions took us 11 weeks to do without any competitor in the market. This last 1 million prescriptions took us four weeks to do. While there's a competitor out there trying really hard to take those prescriptions away from us, and we have not allowed that."
Eli Lilly's weight-loss pill, Foundayo, launched in April, approximately four months after the Wegovy pill entered the U.S. market. While Foundayo has experienced a slower initial uptake, Eli Lilly's CEO, David Ricks, has acknowledged that building brand recognition for a new drug takes time, as doctors and patients become more familiar with it.
