Novo Nordisk has released its third-quarter earnings for 2024, which showed a mix of positive and negative outcomes.
The company exceeded expectations with its weight-loss drug, Wegovy, which generated $2.5 billion in sales for the quarter, an 81% increase compared to the previous year.
However, the overall revenue for the quarter fell slightly short of projections, totaling $10.2 billion. Despite beating earnings per share by nearly 3%, the company's stock experienced a decline in early trading due to a revision of its sales and profit outlook for the year.
Novo Nordisk reported a 24% increase in sales, bringing its revenue to $29 billion for the first nine months of 2024. However, the company has adjusted its sales growth expectations for the year, now forecasting a range of 23% to 27%, down from the previous guidance of 22% to 28%. Similarly, the anticipated growth in operating margins has been revised to 21% to 27%, compared to earlier expectations of 20% to 28%. This cautious outlook is attributed to ongoing pricing pressures and supply chain challenges.
Novo Nordisk faces challenges with its diabetes drug, Ozempic, which has seen a decline in sales. This trend is similar to the experience of competitor Eli Lilly, as non-diabetic patients increasingly opt for weight-loss treatments. Balancing supply and demand effectively is crucial for both companies to meet the needs of diabetes patients who require access to branded treatments.
The ongoing supply constraints for Novo Nordisk's semaglutide products remain a critical issue. Although the U.S. Food and Drug Administration (FDA) has declared all doses of the drug available, a verification process is still underway. Novo Nordisk acknowledges that it will take time to consistently supply the market, which is necessary for the FDA to remove the drug from the shortage list. The supply challenges also affect the availability of compounded versions of GLP-1 drugs, which are seen as alternatives to the branded products.
The mixed earnings report has led to varied reactions from investors, with Novo Nordisk's stock slipping at the start of trading. The company's revised outlook has raised concerns about its ability to maintain momentum in a competitive market. Analysts will closely monitor the company's performance in the coming quarters, considering the ongoing supply chain issues and the evolving landscape of weight-loss and diabetes treatments.
As Novo Nordisk addresses these challenges, its focus will be on leveraging the success of Wegovy while addressing the declining sales of Ozempic. The company's strategic decisions in response to regulatory scrutiny and market demand will be crucial in determining its future trajectory. Novo Nordisk aims to maintain its position as a leader in the pharmaceutical industry as the health and wellness sector continues to evolve.