Novo defends economics of Wegovy pill as lower prices weigh on sales; stock falls

Novo Nordisk‘s CEO sought to reassure investors that its Wegovy pill can drive profitable growth despite lower prices, as investors sent the drugmaker’s shares lower following quarterly results.

The Danish company raised its full-year guidance after reporting better-than-expected adjusted sales and operating profit, but investors remained focused on pricing pressure, the quality of the earnings beat and whether oral Wegovy can become a large enough growth driver to revive Novo’s fortunes.

Novo said lower prices continued to weigh on sales, but CEO Mike Doustdar said that rising volumes and the early performance of the Wegovy pill showed the strategy was working.

“We would not be able to… show a positive growth on the top and the bottom if items like the pill were not doing well and were not profitable,” Doustdar told CNBC’s Carolin Roth on Wednesday.

Doustdar also told reporters the company was seeking a “sweet spot” between pricing and volume, arguing that lower prices were driving strong demand and that Novo would continue adjusting prices as the market evolves.

In the second quarter, “we have a solid volume uptick, well into double-digit numbers, while, of course, we are having a headwind and a challenge because of the prices on our financials this year,” he said.

Novo Nordisk’s quarterly beat and guidance increase did little to resolve Wall Street’s biggest concern: whether the Ozempic maker has a convincing path back to sustainable growth as competition from Eli Lilly intensifies.

Analysts said the better-than-expected quarter benefited from rebate adjustments and other temporary factors, obesity drug sales were broadly in line with expectations, and oral Wegovy slightly missed forecasts. 

At the same time, Novo reported another mixed clinical result for next-generation weight-loss drug CagriSema, reinforcing investor questions about the company’s longer-term pipeline.

“Overall nothing to inspire,” Citi analysts wrote, while Jefferies said the guidance increase left little room for consensus sales estimates to move higher.

The Danish drugmaker hiked its full-year guidance and said it now expects adjusted sales and operating profit to be down 6% to flat at constant exchange rates, an improvement from previous guidance of a decline of between 4% and 12% for both metrics.

Adjusted sales rose 7% at constant exchange rates in the second quarter, while adjusted operating profit increased 11%, with volume growth partly offset by lower prices.

Copenhagen-listed shares fell as much as 5% in morning trading before paring some losses to last trade 4.3% lower after the quarterly report was published one day earlier than expected.

Novo is racing to restore investor confidence in its pipeline and ability to execute, especially in the challenging U.S. market, amid intense pressure from Eli Lilly’s rival medicines Zepbound and Mounjaro, which have rapidly gained market share despite being launched years after Novo’s.

Coming into Wednesday trading, the company’s Danish shares had fallen about 5% year-to-date and were down nearly 70% from their mid-2024 peak, even if they have recovered some ground this year following the Wegovy pill launch.

Novo said the improved outlook was driven by increased expectations for GLP-1 product sales and specifically its Wegovy product portfolio, which includes both an injectable and a pill. The pill has reached more than 5 million prescriptions since its launch, alongside encouraging early uptake in markets outside the U.S. and the rollout of a newly approved higher dose of injectable Wegovy, Novo said.

“I could see a future where actually this market is, to a large extent, a pill market,” Doustdar told CNBC, while stressing that the launch was only six months old.

He also pushed back on concerns that momentum was slowing after oral Wegovy sales came in slightly below some analyst forecasts.

“The fine detail is that [the] first 1 million prescriptions took us 11 weeks to do without any competitor in the market. This last 1 million prescriptions took us four weeks to do, while there’s a competitor out there trying really hard to take those prescriptions away from us, and we have not allowed that,” he said.

Novo said around 80% of patients taking the pill had not previously used a GLP-1 treatment, suggesting it is expanding the obesity market rather than simply drawing users away from injectable Wegovy.

Brian Mulberry, chief market strategist at Zacks Investment Management, told CNBC over email that Novo management is counting on patients preferring pills over injections to fuel growth, but warned success will depend on the company’s ability to execute and scale. 

Eli Lilly launched its rival weight loss pill Foundayo in April, roughly four months after the Wegovy pill hit the U.S. market. It has seen slower initial uptake, and Lilly CEO David Ricks has previously told CNBC that it will take time to build the brand since it’s a new drug that doctors and patients don’t know.

Eli Lilly is set to report earnings early Wednesday.