Topline
Danish pharma giant Novo Nordisk raised its 2024 outlook and beat profit expectations in its first-quarter earnings Thursday morning, amid a frenzied rush to match booming consumer demand for its popular weight loss and diabetes drugs Ozempic and Wegovy.
Wegovy is an injectable weight loss medicine that has helped Novo Nordisk profits soar.
Key Facts
Novo brought in 65.3 billion Danish kroner ($9.4 billion) in net sales during the first three months of 2024, up around 22% on the same period last year.
The company reported net profit of 25.4 billion Danish kroner ($3.65 billion), a 28% year-on-year rise.
Novo’s diluted earnings per share of 5.68 Danish kroner ($0.82) mark a 29% increase from the 63 cents per share reported this time last year.
Both earnings per share and revenue comfortably beat analyst estimates of 75 cents per share and $9.1 billion, respectively, according to FactSet.
Novo raised its outlook for 2024, expecting sales growth of 19% to 27% and operating profit growth between 22% and 30%, ranges that are both one percentage point higher than previous forecasts.
Novo Nordisk shares were down nearly 2% during trading in Copenhagen on Wednesday morning.
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What’s Driving Novo’s Strong Performance?
Booming demand for Novo’s GLP-1 drugs, which includes diabetes medication Ozempic and weight loss drug Wegovy, drove the company’s strong performance. Novo said sales of weight loss drug Wegovy had more than doubled from this time last year, raking in around $1.35 billion, and sales in the U.S., where the company was able to add cardiovascular benefits to Wegovy’s label, grew by more than a third (35%).
Key Background
Novo Nordisk is one of the world’s most valuable firms, a relatively new position for the company after a period of growth even it acknowledges is unusual for a firm of its size. Novo has a market capitalization of just under $600 billion — more than the GDP of its home country, Denmark — a long way up from around $375 billion this time last year, around $257 billion in 2022 and $171 billion in 2021. Novo primarily owes this growth to the phenomenal success of GLP-1 drugs like Ozempic and Wegovy — branded products containing the same active ingredient, semaglutide — respectively used to treat diabetes and weight loss. Alongside U.S. heavyweight Eli Lilly, which makes weight loss and diabetes drugs Zepbound and Mounjaro (both brand names for the drug tirzepatide), Novo enjoys a practical duopoly over the weight loss drug sector, which analysts believe could be worth as much as $100 billion by 2030. The popularity of the drugs have meant both are battling shortages and supplies are expected to remain tight for the foreseeable future.
Crucial Quote
“We are pleased with the sales growth in the first three months of 2024, driven by increased demand for our GLP-1-based diabetes and obesity treatments,” said CEO Lars Fruergaard Jorgensen. He said the company’s investments to ramp up manufacturing capacity for its obesity and diabetes drugs Wegovy and Ozempic “will enable us to serve significantly more people living with diabetes and obesity in the future,” adding that the company is “pleased with the positive results from the kidney outcomes trial with semaglutide and the label expansion for cardiovascular risk reduction for Wegovy in the US.”
What To Watch For
Novo Nordisk, as well as rival Eli Lilly, is exploring reports that the benefits of GLP-1 drugs might extend beyond managing obesity and diabetes. With Novo having already convinced regulators Wegovy can benefit the heart, other research on GLP-1 drugs is exploring their utility for conditions as varied as addiction and substance use disorders, anxiety, kidney disease, sleep apnea and Parkinson’s.
