Novo Nordisk prunes outlook as obesity drug maker loses ground to Eli Lilly

Novo Nordisk prunes outlook as obesity drug maker loses ground to Eli Lilly

Novo Nordisk CEO Mike Doustdar, who took over in August, is driving a turnaround plan to fight back against Eli Lilly, which posted far stronger results last week and raised its 2025 guidance.

Novo Nordisk, maker of Wegovy, shaved its full-year forecasts as sales growth of its blockbuster obesity drugs slowed down, leaving investors worried that the firm is losing ground to US contemporary Eli Lilly and copycat rivals.

The shares of Novo yoyoed through the day, falling and then rising on a better-than-expected Medicare pricing deal in the U.S., before finally falling back as its new CEO struggled to win over investors to scrape back lost market share.

Jefferies analyst Michael Leuchten reportedly said, "Lilly is winning quite meaningfully at the moment” and added that the management's message had not been strong enough after a weak quarter with sales and profits just below forecast.

Novo Nordisk CEO Mike Doustdar, who took over in August, is driving a turnaround plan to fight back against Eli Lilly, which posted far stronger results last week and raised its 2025 guidance.

Rising demand for Wegovy - the first in a new class of GLP-1 weight-loss drugs - propelled Novo to Europe's most valuable firm, worth as much as $650 billion in June 2024.

However, sales growth has slowed sharply amid competition from Lilly's Zepbound and compounded copycat drugs made from the same ingredients, forcing Novo's shares to fall about 70%, a change of CEO, and a board shake-up. Novo is also in a takeover battle with US rival Pfizer for biotech Metsera.

The Danish company is expanding its direct-to-consumer sales in the US, Doustdar said and was confident that Novo Nordisk would win the bidding with Pfizer for Metsera. $10 billion has been bid by Novo to help strengthen its obesity drug pipeline.

Markus Manns, portfolio manager at Novo shareholder Union Investment, reportedly said, "Overall, I didn't find management's tone to be overly optimistic. If you add it up, that's a lot of headwinds over the next two years."

Unlawful mass compounding of GLP-1 drugs expanded in the third quarter, Novo said. There are now well above a million patients using copycat versions in the US, Novo’s US chief Dave Moore reportedly said on a call with analysts.

In May, the firm had said that it expected Wegovy sales to start recovering once the ban on compound copycats was enforced.

Compounders were focusing on semaglutide, the active compound in Wegovy, that was affecting Novo more than Lilly’s Zepbound; HSBC analyst Rajesh Kumar said.

Kumar said, "When there's a lion chasing you and me, I just need to outrun you. If Zepbound and Wegovy both are being targeted with compounded drugs, you just let compounders go after Wegovy, which is a better-known brand.” Lawsuits have been filed against dozens of US pharmacies and companies selling Wegovy copies by Novo but sales have continued.

Novo now expects full-year operating profit - measured in local currencies - to grow between 4% and 7%, down from 4%-10% previously. It trimmed its full-year sales growth to between 8% and 11%, down from 8%-14%.

It expects sales growth to slow further in the fourth quarter, after growing at the slowest pace since early 2022 in the third quarter at 11%, below analysts' estimate of 11.4%.