Weight loss drugmaker Novo Nordisk cuts annual profit forecast as Wegovy sales fall short

Novo is vying with US rival Eli Lilly for supremacy in the pharmaceutical industry’s fastest-growing new market: obesity drugs.

Novo shares have gained 27% this year through Tuesday’s close.

Novo Nordisk reported disappointing sales of its blockbuster weight-loss treatment Wegovy, a rare setback for the Danish drugmaker as it braces for more competition in the booming market.

Revenue from the drug was hit by higher-than-expected price concessions to US managers of pharmacy benefits in the latest quarter, chief financial Karsten Knudsen said in a conference call with journalists.

He called it a one-time factor, but the size of the shortfall raised concerns among investors about growing pricing pressure as Eli Lilly muscles in with its rival product.

Wegovy is increasingly available through Medicaid, the US health program for the poor, Doug Langa, who heads the company’s North American operations, told investors on a conference call.

Novo’s shares were down 3.6% in afternoon trading in Copenhagen, having fallen as much as 7.7% earlier in the day. They had gained 27% this year through Tuesday’s close.

Second-quarter sales of Wegovy were 11.7 billion Danish kroner (€1.5bn), the company said in a statement, while the average estimate was 13.7 billion kroner.

Novo is vying with Lilly for supremacy in the pharmaceutical industry’s fastest-growing new business, obesity drugs. The market is expected to reach $130bn by the end of the decade.

Until now, the biggest obstacle has been satisfying demand, and both drugmakers have pledged billions of dollars to increase production capacity while working to convince more insurers to reimburse them for patients.

“There’s now a competing product and significant volume growth, which puts pressure on everyone,” Barclays analyst Emily Field said in a note to investors.

As Novo wins access to more insurers in the US, it’s being forced into discounting via a complex system of rebates paid to pharmacy benefit managers.

It’s a phenomenon the company had foreseen, but the rebates Novo is paying are higher than the company expected last year, Mr Knudsen said in a conference call with journalists.

“When you expand your market access, you typically also give somewhat higher rebates,” chief executive Lars Fruergaard Jorgensen said in an interview with Bloomberg Television.

Revenue was rescued after Wegovy and Ozempic’s underperformance, due to price pressure and supply constraints, by beats elsewhere in the diabetes and obesity franchises, particularly for insulin.

- Bloomberg