LONDON (Reuters) – Novo Nordisk raised its outlook for 2024 on Thursday, after reporting operating profit above analysts’ expectations for the first quarter.
Rising outlook and strong results demonstrate Wegovy’s success and Novo Nordisk’s lead in the booming weight-loss drug market, although the Danish pharmaceutical group faces stiff competition from its rival American Eli Lilly.
Novo Nordisk’s growth, however, has been hampered by its ability to increase production quickly enough to meet demand.
The stock lost 2.14% at 8:22 a.m. GMT on the Copenhagen Stock Exchange, a setback, while it has increased by around 260% since the launch of Wegovy in the United States in June 2021.
Two analysts told Reuters that the stock’s decline was likely partly due to perceptions of a lower-quality earnings report, given one-off adjustments in the prior period.
Other analysts and a shareholder of the group cited Wegovy sales lower than expected.
The company is spending billions to expand its production capacity to meet exploding demand for Wegovy’s weekly injection.
Lars Fruergaard Jorgensen, CEO, told a press conference that the quantity of Wegovy supplied to the US market increased during the first quarter.
About 27,000 new patients in the United States are starting to receive the shot each week, Lars Fruergaard Jorgensen said, four times more than in December.
“This is a very good increase in volume, as we had planned,” he added.
A year ago, Novo Nordisk began limiting the number of U.S. patients who could start treatment by reducing its supply of the three lowest doses of the weekly appetite-suppressing injection.
In January, the company said it would more than double the supply of Wegovy’s lowest or “starter” doses in the United States compared to previous months.
Shortages nevertheless persist in the United States.
COMPETITION
The group faces stiff competition from American rival Eli Lilly, which launched its Zepbound treatment in the United States in December and in Germany, Poland and Britain this year.
As volume and competition increased, the price of Wegovy fell “slightly” in the first three months of the year, Chief Financial Officer Karsten Munk Knudsen said.
The group now expects sales growth this year of between 19% and 27% in local currencies, compared to a growth range of 18% to 26% previously announced.
Operating profit growth this year is now estimated at between 22% and 30% in local currencies, a slight increase from the previous forecast of 21% to 29%.
“Given the current supply constraints, Novo delivered a satisfactory set of figures,” said Markus Manns, portfolio manager at Union Investment in Germany and Novo shareholder.
“The forecast increase was only modest, but most people did not expect an increase so early in the year,” he told Reuters.
Novo Nordisk reported first-quarter earnings before interest and tax (Ebit) of 31.8 billion Danish crowns, higher than the 29 billion expected by analysts in an LSEG poll, and up 27% from the previous year.
(Reporting Maggie Fick; French version Lina Golovnya and Stéphanie Hamel, editing by Kate Entringer)
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