Novo Nordisk (NVO) is sitting on a miracle drug in Wegovy, but despite its first-mover advantage, it doesn't seem to have a prescription for growth in the increasingly crowded weight loss drug market.
You wouldn't think that's a problem, seeing how Wegovy, its similarly-situated diabetes drug Ozempic and other diabetes/obesity drugs saw sales grow 26% last year to DKK 271.8 billion ($42 billion.) But when you promise investors double-digit sales and profit growth, it is.
On Tuesday, Novo took an axe to its financial outlook in a surprise corporate update call where it replaced its CEO with an insider who seeks to tame worries about the company's declining market share in the diabetes and obesity marketplace.
Weaker U.S. sales of its weight loss and diabetes wunderkind were being kneecapped by cheaper, compounded GLP-1 ripoffs sold by telehealth pharmacies. In addition, the company is facing competition from Zepbound, sold by competitor Eli Lilly (LLY) .
As a result, it has reduced its outlook for:
- Full-year sales growth: 8% to 14% (down from 13% to 21%)
- Annual operating profit growth: 10% to 16% (down from 16% to 24%)
The revelation sent Novo stock falling nearly 22% intraday.
Telehealth, Total Irony
In recent months, Novo had attempted to take its branded medication directly to consumers by partnering with Hims & Hers Health (HIMS) to sell the drug on its marketplace. Despite that, Hims continued selling compounded GLP-1 meds.
A month later, Novo ended its “collaboration” with the company, complaining about “deceptive promotion and selling of illegitimate, knockoff versions of Wegovy that put patient safety at risk.”
Novo Nordisk will report earnings on Aug. 6, 2025.
Why Are Pharmaceutical Stocks Down?
On the news, Novo's 21% slide set off a cascade of similar declines. The iShares U.S. Pharmaceuticals ETF (IHE) was down 1.4% intraday.
