Novo Nordisk stock slumped Wednesday after the drugmaker said it expects continued competition this year from "unsafe and unlawful" copycat versions of its blockbuster obesity drug, Wegovy.
The cautious view follows Novo's decision last week to cut its outlook for 2025 — a move that sent Novo Nordisk stock crashing. Despite that, Wegovy sales soared more than 67% to roughly $3.04 billion in the June quarter. That beat expectations for $2.97 billion, according to FactSet.
Still, Dave Moore, Novo's executive vice president of U.S. operations, estimates around 1 million people in the U.S. are using compounded GLP-1 drugs, including semaglutide, the chemical backbone behind Wegovy and its diabetes counterpart, Ozempic.
This spring, the Food and Drug Administration determined Wegovy and Eli Lilly's Zepbound were no longer in shortage, meaning compounders had to stop selling copies of the branded dosages. To keep the business going, companies like Hims & Hers Health have been leaning into personalized doses.
"Novo Nordisk is working to prevent unlawful and unsafe compounding of semaglutide in U.S., while making sure patients have access to safe legitimate semaglutide produced only by Novo Nordisk," Moore said on the earnings call with analysts. "As unsafe and unlawful mass compounding continues, the Wegovy penetration within the cash channel has been lower than expected."
Novo Nordisk stock skidded 3.9% to 45.38.
Total Sales Beat, But Ozempic Lags
Across all products, Novo Nordisk's sales rose 13% to about $11.95 billion, narrowly ahead of forecasts for $11.91 billion. The company earned 93 cents per share, beating projections for 91 cents. Earnings climbed almost 33%.
Diabetes drug Ozempic brought in roughly $4.94 billion in sales, up 10% year over year, but below the Street's call for $5.03 billion.
Outgoing Chief Executive Lars Fruergaard Jorgensen says the market for compounded GLP-1 drugs is "equal size to our business," according to Reuters. But compounded versions of Wegovy are sold at a "much lower price point." Novo Nordisk is now working to expand the cash-pay side of its business.
The company's NovoCare Pharmacy targets patients paying out of pocket for GLP-1 drugs. The cash-pay segment has struggled thanks to compounded knockoffs, Novo's Moore said. It accounts for about 10% of Wegovy prescriptions. Meanwhile, CVS' decision to only cover Wegovy as a weight-loss drug is starting to show "positive early indicators," he said.
Layoffs Could Be Coming
Still, Novo retained its recently lowered outlook for 8%-14% sales growth this year, excluding the impact of exchange rates. The company expects operating profit to grow in the 10%-16% range. Novo is now planning to cut costs after the guidance cut hammered Novo Nordisk stock last week.
"We probably won't be able to avoid layoffs," Jorgensen told Danish broadcaster DR, according to Reuters. "When you have to adjust a company, there are some areas where you have to have fewer people, some (areas) where you have to be smaller."
The decision will take place under incoming CEO Mike Doustdar.
As part of the streamlining process, Novo also shuttered several programs, including plans to test a treatment for metabolic dysfunction-associated steatohepatitis, or MASH. It also scrapped a once-weekly obesity treatment that relies on the GLP-1 and GIP mechanisms and another weight-loss drug in testing that blocks the CB1 receptor. Novo also ended a dyslipidemia program.
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