Novo Nordisk shares tumble on forecast for steep drop in sales this year

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Shares in Novo Nordisk plunged after the company shocked investors by forecasting a steep decline in sales, evidence of an intensifying price war in obesity drugs.

Sales will fall by as much as 13 per cent this year, the company said Tuesday. Pressure from lower prices for its blockbuster weight-loss drugs, in part due to the US government’s push to cut prices, will contribute to the decline.

“It really paints a picture of a challenged Novo,” Lars Hytting, head of trading at ArthaScope, an investor in the Danish drugmaker, said in an interview. “Even the most sceptical analyst” didn’t anticipate this big of a drop, he said.

The shares fell as much as 20 per cent in early Copenhagen trading, the biggest intraday decline since July, more than wiping out the previous gains for this year.

Novo’s warning reflects mounting competition in the fast-growing market for weight-loss drugs, as it fights for market share with Eli Lilly and telehealth companies selling cheaper copycat versions of their drugs. It also highlights how drugmakers are under pressure from US president Donald Trump to lower pharmaceutical costs for many Americans.

The Trump administration in November announced steep discounts for Novo’s blockbuster drugs Ozempic and Wegovy sold to Medicare, the federal health insurance program for the elderly. Those prices go into effect in 2027.

The surprisingly downbeat outlook deepens the challenges facing chief executive Mike Doustdar, who has moved to cut jobs and instil a more performance-oriented culture at Novo after it lost its early lead in the market for revolutionary weight-loss treatments that have generated billions of dollars in sales and attracted growing competition.

“While today you see negative growth on the financial numbers, I see a lot of positive growth on the other side of the business,” said Doustdar on Tuesday, hailing the success of the recent launch of the Wegovy pill. He said Novo’s main aim is now to stay focused on its transformation and develop new drugs.

Management changes are already taking place with Dave Moore, who headed the US business for a year, leaving to be replaced by Jamey Millar, who is currently at UnitedHealth Group and has also worked at GSK. Novo also appointed Hong Chow to lead product and portfolio strategy starting February 15. She most recently oversaw the China and international business for Merck Healthcare.

Novo’s annual sales last fell in 2017 amid a price war over insulin in the US. The company is trying to fend off competition on multiple fronts, with rival Lilly’s shot Zepbound taking leadership in the US market and generic copies of Ozempic likely to emerge in international markets this year.

The company will face “unprecedented pricing pressure” this year, Doustdar said on a call with media Wednesday.

The Danish drugmaker will be hit by lower prices in the US, but that should help more patients access their products, Karsten Munk Knudsen, Novo’s CFO, said in an interview. “One could say it’s short-term pain for long-term gain, but of course we need to show over the coming years that we then expand the market correspondingly,” he said.

A pill version of the blockbuster obesity shot Wegovy has fed some optimism this year. The pill had a “really good start” with more than 170,000 patients starting on it since its launch, according to Knudsen. “It’s the strongest launch in this market ever,” he said.

Rather than cannibalising sales of its injectable shots, Knudsen said with the early data Novo has, more than 80 per cent of patients are new to GLP-1 treatment. “We see very limited switch from other GLP-1 compounds,” he said. “But again, it’s early days. But I would say our overarching strategy is one of expanding the markets.”

Management comments on the Wegovy pill’s early commercial performance as well as sales expectations for Ozempic will be key issues for investors during Novo’s earnings call on Wednesday, BMO Capital Markets analyst Evan David Seigerman said in note.

Novo said Tuesday that it will start a new stock buyback worth as much as 15 billion Danish kroner (€2 billion). – Bloomberg