Novo Nordisk Slips Amid Disappointing Wegovy Sales

Novo Nordisk is discovering that unprecedented success can have adverse side effects. 

The Danish pharma giant’s share price fell over 8% on Wednesday after the company reported lower-than-expected sales of Wegovy, one of the hottest drugs of the century. And the problem isn’t just that Novo Nordisk can’t make it fast enough. 

Medicare to explain?

The company has long dealt with shortages for its incredibly popular weight-loss drug. What’s new is that a lot more people can afford it. The injectable drug is increasingly available via Medicare in the US, and is now offered via Medicaid in 20 different US states, Novo Nordisk said Wednesday. Also, more and more commercial insurers are adding coverage for Wegovy after previously covering only its counterpart, Ozempic, for patients battling diabetes. The upshot: Wegovy’s weekly prescriptions have hit 200,000, up from 100,000 at the beginning of the year, CFO Karsten Munk Knudsen said Wednesday. But that’s come at a cost.

With more insurers including Wegovy, Novo has faced a complex web of rebates, leading to higher-than-expected price concessions to pharmacy benefit managers. That’s in addition to ongoing supply chain constraints and increasing price pressure from emerging competition, particularly Eli Lilly’s Zepbound. All of this is eating into Novo Nordisk’s bottom line:

• Sales of Wegovy hit 11.7 billion Danish kroner in the quarter (around $1.71 billion), missing estimates of 13.5 billion kroner. US sales accounted for 9.9 billion Danish kroner, around 12% short of a Barclays estimate. Overall sales were still up 55% year-over-year.
• Knudsen insisted the disappointment was nothing more than a “quarterly blip.” Still, the company announced a downward revision of its operating profit growth: between 20% and 28%.

Selling Yourself Short: Wegovy’s supply constraints are easing. Somewhat. The drug comes in doses of five different strengths, and only the introductory dosage remains on the US Food and Drug Administration’s official shortage list. To ensure that everyone who starts the drug has enough starter-level doses before graduating to the next stage, CEO Lars Fruergaard Jørgensen said the company will continue to limit supply — for now, at least.

Eli Lilly saw its own weight-loss drug Zepbound finally escape the shortage list this week, and this morning its earnings revealed an upsurge in sales. Now, the pharma player is taking steps to ensure its next blockbuster drug isn’t hit by any supply shortfalls. On Wednesday, Eli Lilly announced it has invested $10 million into isotope supplier Ionetix, which makes a key component of many cancer-fighting radiopharma drugs, also in short supply today.