Novo Nordisk raises profit forecast on high demand for weight loss drugs

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Novo Nordisk raised its profit outlook for the year as strong sales of its hugely popular diabetes and weight loss drugs Ozempic and Wegovy continued to drive high profits.The Danish pharmaceutical company reported better than expected quarterly sales of DKr65bn ($9.3bn), up 24 per cent year on year at constant exchange rates, while net profits jumped 28 per cent to DKr25bn. The drugmaker is now expecting sales to grow between 19 and 27 per cent in 2024, while operating profits are set to rise as much as 30 per cent, up from an upper limit of 29 per cent.Novo Nordisk has been investing heavily in manufacturing capacity to meet runaway demand for Wegovy and Ozempic. It said it would face “continued periodic supply constraints”, but had started to increase the supply of doses for new Wegovy patients in January, having cut back the release of starter doses in May due to supply constraints.The company said it was now adding more than 25,000 new patients for Wegovy per week in the US, up from around 5,000 each week in December. Lars Fruergaard Jørgensen, chief executive, said that pace was “approaching the peak seen last year”. Novo Nordisk, however, said higher sales volumes and competition among rival pharmaceutical groups had pushed down the price of the popular drug, leading to lower revenue from Wegovy than analysts had expected. Diabetes sales offset that decline, helping the group deliver sales ahead of forecasts. Despite the raised outlook, shares in the company dipped 2.8 per cent when markets opened in Copenhagen on Thursday, following the lower than expected Wegovy revenues.Karsten Munk Knudsen, chief financial officer, said: “As volume expands and we get into more and more channels and competition enters the market, it’s to be expected that pricing goes down.”According to a Food and Drug Administration database tracking drug shortages, lower doses of Wegovy have limited availability at present but higher doses and Ozempic injections are in good supply.Pricing pressure is set to continue after senator Bernie Sanders launched a US Senate probe last week into “outrageously high prices” of its drugs in the country. The list price of Wegovy is $1,349 in the US, 14 times above the UK price, Sanders noted. RecommendedMeanwhile Novo Nordisk has faced competition from rivals including Eli Lilly, the maker of Mounjaro and Zepbound drugs, which reported strong sales growth on Wednesday. Novo Nordisk, however, retains more than half of the global market for GLP-1 treatments like Wegovy and Ozempic and 85 per cent global market share of obesity care, according to figures from data provider IQVIA cited by the company.Jørgensen said there was little evidence of patients switching to other drugs as it faced increased competition. “The number of patients seeking care is so significant that we don’t see a lot of switching.” High demand for its drugs has driven Novo Nordisk to become the most valuable company in Europe, with shares up over 25 per cent this year, and its valuation rising to over $570bn.

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