Novo Nordisk’s Doing Brilliantly, Just Not Brilliantly Enough

Is Novo Nordisk being subjected to unrealistic beauty standards? 

The Danish pharma giant and Wegovy maker reported earnings on Wednesday, posting some chunky year-over-year growth and far outperforming its only real rival at the moment, Eli Lilly. The news unsurprisingly caused a pop in the company’s share price — but it came crashing back down to earth on Thursday, hitting a nine-month low. The problem? Investors’ expectations are just so high, there’s no pleasing them.

No Time to Savor Victory

Novo Nordisk’s sales of its twin blockbuster drugs — Ozempic (primarily for diabetes) and Wegovy (for obesity) — held strong in its Wednesday earnings, increasing year-over-year by 32% and a whopping 76%, respectively. The Financial Times reported that Novo Nordisk’s numbers were broadly in line with what analysts had predicted. That’s in stark contrast to Eli Lilly, which last week posted a sales miss that sent shares falling about 8%. News of Novo Nordisk’s results also appears to have sent Eli Lilly’s shares on another dive: They dropped around 5% on Wednesday. 

But Novo Nordisk didn’t get time to rest on its laurels — some analysts think the market is starting to correct following the run-up weight-loss drug companies enjoyed earlier this year:

• “It’s a stock that needs to be normalized. At the beginning of the year, there was too much hype around it,” Gilles Guibout, head of European equity strategies at AXA Investment Managers in Paris, told Reuters.
• Guibout also said that hedge funds may be playing a role in the fluctuating share price. “Its market has significant potential. However, it’s easier to find sellers than buyers for the stock, as everyone already holds plenty of it,” Guibout said.

Novo Nordisk and Eli Lilly only have so much time to enjoy their market as a two-horse race. AstraZeneca announced on Monday that an early-stage trial for a weight-loss pill had shown the drug was safe.

Long Convalescence: One pharma giant managed to overcome high expectations. Moderna posted a third-quarter profit on Thursday, and the unlikely knight in shining armor was its new COVID-19 vaccine, which sold in higher volumes than expected.