Novo Nordisk, in a mixed-bag earnings report, beat expectations on Wegovy sales but tightened its 2024 outlook

11/07/2024 00:06
Novo Nordisk, in a mixed-bag earnings report, beat expectations on Wegovy sales but tightened its 2024 outlook

Novo Nordisk reported mixed Q3 earnings, but GLP-1 drugs contributed to revenue strength. The company also adjusted its year-end outlook. Wall Street wasn't cheery about that.

Novo Nordisk (NVO) reported mixed earnings for the third quarter of 2024 but beat Wall Street revenue expectations for its blockbuster weight-loss drug, Wegovy.

Novo announced an earnings per share beat of nearly 3%, at $0.88 per share, but missed slightly on revenue, at $10.2 billion for the quarter. Novo has seen an increase in sales overall by 24%, bringing in revenue of $29 billion for the first nine months of 2024.

The company's stock slipped nearly 3% at the start of trading Wednesday after the company reduced its sales and profit outlook for the year, lowering the higher end of expectations due to ongoing decreased pricing and supply pressure. Novo now expects sales growth between 23% and 27% compared to previous guidance of 22% to 28%. The company also now expects operating margin growth of 21%-27% compared to previous guidance of 20%-28%.

But the one bright spot was Wegovy sales, which reached $2.5 billion for the quarter, an 81% jump year over year.

CFO Karsten Munk Knudsen told Yahoo Finance in an interview Wednesday that the company's momentum continues to grow as it creates more supply of the hot-ticket GLP-1 products.

"Topline momentum is very solid for the company, and that's really a function of the fact that we have very compelling products, especially in Ozempic and Wegovy," Knudsen said.

Like competitor Eli Lilly (LLY), Novo saw a decrease in sales of its GLP-1 diabetes drug, Ozempic. The trend continued from the previous quarter and is one that Lilly CEO David Ricks said is likely due to a pivot from non-diabetics who are using the weight-loss brand now that it is in greater supply — providing some relief for diabetes patients seeking the appropriate branded treatment.

Unlike competitor Lilly, Novo's semaglutide drugs are still considered to be in a shortage — for now. The US Food and Drug Administration has declared all doses of the drug available, but the FDA will still go through a verification process, as it did with Lilly, before it declares the shortage of the drug over.

"It will take some time for us to prove that we continue to supply and scale into the market for the FDA to fully take us off the drug shortage list," Knudsen said.

That will trigger an end to allowed compounded versions, or pharmacy copycats, of the branded GLP-1 drugs.

Still, both market leaders have acknowledged they will struggle for some time to meet demand consistently. Knudsen reaffirmed that Wednesday, saying that despite doubling the number of US patients served year over year in the third quarter, the company still expects intermittent supply constraints in the near term.

President and chief executive officer of Novo Nordisk, Lars Fruergaard Jørgensen, testifies during a Senate Health, Education, Labor, and Pensions hearing to examine Novo Nordisk's high prices for Ozempic and Wegovy for patients with diabetes and obesity on Capitol Hill, Tuesday, Sept. 24, 2024, in Washington. (AP Photo/Mariam Zuhaib)

Upside surprise for Wegovy: President and chief executive officer of Novo Nordisk, Lars Fruergaard Jørgensen on Capitol Hill, Tuesday, Sept. 24, 2024, in Washington. (AP Photo/Mariam Zuhaib) · ASSOCIATED PRESS

The company has scaled up manufacturing to meet demand in the US and abroad and is already working with manufacturing firm Catalent, which its parent, Novo Nordisk Foundation, is acquiring. The deal is expected to close this year, with three sites from the deal going to Novo in a separate purchase deal with its parent company in order to produce more GLP-1 products.

"We have scaled our GLP-1 products ... by a factor of three in terms of patients served over the last three years, and we are serving ... two-thirds of the market for GLP-1s," Knudsen said.

That figure will only grow as the company has received FDA approval for Wegovy as a cardiovascular treatment — opening the door to Medicare coverage — and recently revealed data to support Wegovy's use as a treatment for fatty liver disease, which would add to demand and government coverage costs.

Knudsen said since the approval for the cardiovascular benefits came in between the insurance plan year, 2025 will be the first real year to gauge how many Medicare patients are getting coverage for the benefit. Medicare does not cover weight-loss drugs, so the additional benefits being tested in clinical trials are key to greater revenues for the companies.

Mizuho's healthcare expert Jared Holz said the company still needs to address ongoing supply constraints and find a way to compete with Lilly's weight-loss pill, which is due to market in the next year.

"Still think the company needs to solve for a real oral strategy given some issues around its existing assets but given market leadership and core competency here, believe internal/external development efforts will take place, in time," Holz said in a note to clients Wednesday.

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Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. That includes GLP-1s, of course. Follow Anjalee on most social media platforms @AnjKhem.

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