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London — Novo Nordisk trimmed its full-year profit outlook Wednesday after reporting weaker-than-expected quarterly sales of its popular weight loss drug Wegovy.
The results end a prolonged streak of positive earnings news from the first mover in the obesity drug race, which has seen its market value surge to more than $500 billion, making it Europe’s most valuable listed company.
Novo shares, which have soared some 230% since June 2021, fell as much as 7.7% in early trading and were down 4.8% by 9:21 a.m. ET.
Chief Financial Officer Karsten Munk Knudsen in an interview called the market reaction unsurprising, given the market’s sensitivity to Novo’s mega-blockbuster drug Wegovy.
Second-quarter profit also missed expectations, potentially deepening investor worries that Novo’s dominance in the fast-growing obesity drug market — which some forecast could be worth about $150 billion by the early 2030s — is at risk as the company races to expand capacity to meet runaway demand.
The soft second-quarter results are “in sharp contrast to the massive sales and earnings beats we have seen last year,” said Markus Manns, a portfolio manager at Novo shareholder Union Investment in Germany.
CEO Lars Fruergaard Jorgensen downplayed concerns over competition from US rival Eli Lilly in a call with journalists, saying that he did not see those dynamics having a big impact on sales in the foreseeable future.
Novo will continue restricting supplies of the lowest or starter dose of Wegovy to the US market to ensure patients who start treatment can continue, Jorgensen added.
Sales of Wegovy, Novo’s first-to-market weight loss drug, rose 53% to 11.66 billion crowns, well below the 13.54 billion crowns expected by analysts, while sales of Ozempic, a diabetes drug with the same active ingredient, also just missed expectations.
Novo ended an advanced kidney disease trial in June, resulting in a 5.7 billion Danish crown impairment loss, which it said impacted operating profit.
The Danish company cut its operating profit growth forecast this year to between 20% and 28% in local currencies from 22% to 30% previously.
Operating profit in the quarter rose 8% at constant exchange rates to 25.9 billion Danish crowns ($3.8 billion) compared with the 27.3 billion crowns forecast by analysts in an LSEG poll.
Nevertheless, Novo raised its sales growth outlook for this year to between 22% and 28% in local currencies from 19% to 27% previously.
Jorgensen said on the media call that the upgrade showed Novo is comfortable in its ability to further ramp up supply, without giving details.
Analysts from Barclays and Citi both said that, although the second-quarter numbers were weaker than expected, Novo’s statements on boosting Wegovy production were reassuring.
Novo is spending billions of dollars to lift Wegovy production to meet runaway demand and fend off Lilly, which launched its rival therapy Zepbound in the United States last December.
Though Novo and Lilly are now going head-to-head with obesity treatments in a number of markets, including Britain and Germany, the most lucrative one by far is the US, where more than 70% of adults are obese or overweight.
Lilly will release quarterly numbers Thursday.
Novo said it had withdrawn its submission to US and European regulators for approval of Wegovy to treat heart failure and kidney disease, and planned to resubmit with more data at the start of 2025.
