Novo Nordisk slashes outlook even as it ramps up Wegovy production
Danish drug maker Novo Nordisk lowered its full year forecast even as tens of thousands of patients start the highly coveted weight loss drug, Wegovy, every week.
Novo Nordisk lowered its full year forecast as Wegovy sales fell below expectations. Still, it hasn't wavered on plans to ramp up supply of the highly coveted weight loss drug.
The Danish pharmaceutical giant lowered its operating profit outlook for the year on Wednesday to 20% to 28% growth, down from 22% to 30% growth last quarter. The company reported that sales of Wegovy and Ozempic, its most popular weight loss-related drugs that have caused frenzied demand, came in below Wall Street estimates during the second fiscal quarter.
Sales of Wegovy jumped 55% annually to 11.66 billion Danish kroner, which was also below the company's projections of 13.54 billion kroner, according to the Wall Street Journal.
The company's stock, which surged over 360% since pre-pandemic days, slipped following Wednesday's earnings report.
CFO Karsten Munk Knudsen told Yahoo Finance that Wednesday's report was just "a blip" and that the company is still scaling Wegovy "significantly."
"We have doubled the number of doses we are supplying into the market from the beginning of the year. We have now launched in 12 markets outside North America," Knudsen said.
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The Danish pharmaceutical giant said four of the five dose strengths (0.5 mg, 1 mg, 1.7 mg and 2.4 mg) are now available, and that it's continuing to manage shipments of the starting dose of Wegovy, which is 0.25 mg, "to responsibly initiate patients on treatment."
The company had been working to ramp up production capacity after being forced to limit the supply of certain dose strengths to wholesalers for distribution to retail pharmacies in May 2023 due to frenzied demand.
Still, despite issues meeting demand, about 35,000 patients on average in the U.S. alone have been starting treatment with the medication per week to date, a spokesperson for the Danish pharmaceutical giant told FOX Business Wednesday.
That figure, slightly up from the average of 25,000 people starting the drug per week in May, underscores the ongoing demand for Wegovy, a blockbuster drug that's significantly boosted profits for Novo, and subsequently ignited a fierce competition between rival drug manufacturers who have or are in the midst of developing their own versions like Eli Lily and Pfizer.
Several telehealth companies like Ro and Hims and Hers Health, have also begun selling such drugs on their platforms in order to capitalize on the craze.
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Morgan Stanley estimated that as much as 9% of the U.S. population will be on the weight loss drugs by 2035, which is five times the number of people today.
"Obesity drugs have proved to be a disruptor on a scale matched by few other pharmaceutical innovations," Morgan Stanley Research wrote in April. "Their emergence, along with a change in the way that obesity and related illnesses are regarded and treated, has put the new class of drugs on a blockbuster path with no signs of letting up.
Morgan Stanley projected that the global market for obesity drugs will reach $105 billion in 2030 and could reach as high as $144 billion.
Sales of branded obesity drugs were $6 billion in 2023.
"The obesity drug market is being driven by two key factors. The first is supply. Drugmakers have to keep pace with demand," head of Morgan Stanley's European Pharmaceuticals team Mark Purcell said.
Purcell added that major drugmakers are expected to spend more than $50 billion to shore up supply chains through 2028 as they look to use the drugs to treat a wider range of illnesses.
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"Demand for these medicines could be turbocharged if there’s broadening evidence that these drugs improve outcomes in the hundreds of obesity-related ailments," Purcell said.
The Food and Drug Administration (FDA) already approved Wegovy for use as a heart disease prevention medication in March.
The injectable semaglutide — originally approved for weight loss for certain patients — is now also indicated to reduce the risk of cardiovascular death, heart attack and stroke in adults who have cardiovascular disease and are either overweight or obese.