Danish drugmaker Novo Nordisk has temporarily reduced its supply of Wegovy, its weight-loss drug, in the US by around 50% due to supply constraints and rising demand. The move has been made to safeguard continuity of care for existing patients. Novo Nordisk’s obesity care products, including Wegovy, have experienced a surge in demand, with sales rising by 124% in Q1 2023. Despite reducing supply of some dose strengths, Novo Nordisk has also invested in a second manufacturer of Wegovy and plans to begin production with a third producer later in the year to ease pressure. Novo Nordisk’s Q2 earnings before interest and taxes also beat analyst expectations, with the company seeing a rise of more than 140% in its stock since the launch of Wegovy in the US in June 2021. Novo Nordisk is prioritising US supplies of Wegovy over launching in new markets.
Novo Nordisk Expects Oral Obesity Treatment to be Similar in Efficacy to its Injection
Novo Nordisk is running late-stage clinical trials on its oral semaglutide drug, which treats obesity. The drugmaker expects the pill to be similar in efficacy to its injection, Wegovy, following the OASIS 1 trial which is expected to complete by the end of June. Martin Holst Lange, head of development at Novo Nordisk, believes the oral drug has “strong potential” as a treatment for obesity, particularly for those who may prefer a pill version of the drug. The GLP-1 agonist-based treatment has also proven popular for its ability to treat type 2 diabetes.
Novo Nordisk Reports 54% Sales Growth for Q1 2023
Novo Nordisk has reported overall sales growth of 54% in Danish kroner, or 50% at constant exchange rates, for Q1 2023. The company’s diabetes sales grew by 54% measured in Danish kroner, while rare disease sales decreased by 15%. Obesity care sales increased by 131% in Danish kroner to DKK 7.8bn ($1.2bn). The company raised its 2023 outlook with sales and operating profit growth expected to be 24-30% at constant exchange rates and 28-34%, respectively. Novo Nordisk has also expanded its ongoing share repurchase programme by DKK 2bn to DKK 30bn. Novo Nordisk generated revenues of DKK 177bn in 2022, up 26% in Danish kroner and 16% at the currency exchange rate from the previous year. The company employs around 57,100 people in 80 countries.
Novo Nordisk’s Weight Loss Drugs See Strong Growth Potential
Novo Nordisk’s obesity care products, Wegovy and Ozempic, have seen strong sales growth potential, driven by increasing demand for weight loss treatments. Wegovy has experienced high demand since its launch in 2021 in the US, with more than 100,000 prescriptions written per week. The weight loss market is predicted to be worth up to $100bn by 2030, with less than 2% of the world’s obese population treating it with medication. Despite facing supply constraints, Novo Nordisk is working to ramp up production and supply the large number of new patients who may need to take the drugs for an extended period.
Novo Nordisk’s Strong Free Cash Flow and Profit Margins Position the Company to Continue Investing in its Business
Novo Nordisk, a global healthcare company based in Denmark, has seen strong growth driven by its leadership in the worldwide diabetes market as well as its presence in hemophilia care, growth hormone therapy, hormone replacement therapy, and obesity. The company has a strong free cash flow and profit margins, which position it well to continue investing in its business and expanding its manufacturing capabilities to support the growth of Wegovy and Ozempic. With Novo Nordisk’s ongoing share repurchase programme, the company is also well-positioned to generate returns for its investors. Despite the stock appearing expensive, it could still be a relatively cheap buy for a long-term investment.
