Strong sales of diabetes and weight loss drugs Ozempic and Wegovy have prompted the Danish pharmaceutical company Novo Nordisk to raise its 2024 profit forecast to up to £15.3bn, with supply shortages starting to ease.
Europe’s most valuable company, whose stock market value exceeds the size of the Danish economy, has struggled to keep up with runaway demand for the two weight-loss jabs.
They have been endorsed by celebrities such as Oprah Winfrey and Elon Musk, although others such as the US comedian Amy Schumer have spoken of having to stop taking Ozempic because of the side-effects.
Novo Nordisk made sales of 65bn Danish kroner (£7.5bn) in the first three months of the year, up 24% at constant exchange rates. This propelled pre-tax profits 29% higher to nearly 32bn kroner.
The drugmaker is now expecting sales to grow between 19% and 27% this year, up from its previous estimate of between 18% and 26%. Operating profits are now forecast to increase between 22% and 30%, up from a previous estimate of 21% to 29%. Last year it made an operating profit of 102.6bn kroner.
Novo’s chief executive, Lars Fruergaard Jørgensen, said 27,000 people were starting to use Wegovy injections for obesity every week in the US, up from 5,000 each week in December.
The company is spending billions to expand its manufacturing capacity. The success of the drugs has resulted in “periodic supply constraints” and shortages. However, in January Novo Nordisk said it had doubled supply of “starter doses” for new Wegovy patients in the US after constraints forced it to restrict the release of the injections last May.
Wegovy and Ozempic are part of a new class of weight-loss and diabetes drugs known as GLP-1, which are injected once a week and suppress people’s appetite. The GLP-1 agonist mimics the action of a hormone that is naturally released by the stomach when people eat food. They have helped some people lose significant amounts of weight but can cause unpleasant side-effects such as nausea.
Novo Nordisk said higher sales volumes and competition with rival drugs had pushed down the price of Wegovy, leading to lower revenues than analysts had expected. However, this was offset by sales of Ozempic.
Pressure is mounting on the company to reduce its prices further. Bernie Sanders, who chairs the US Senate health, education , labor and pensions committee, launched an investigation last week into “outrageously high prices” of Ozempic and Wegovy. He noted that Novo Nordisk charges $969 (£775) a month for Ozempic in the US, but just $155 in Canada and $59 in Germany. For Wegovy, the monthly cost is $1,349 in the US, $140 in Germany and $92 in the UK.
Novo Nordisk’s main competitor, the US drugmaker Eli Lilly, raised its annual sales forecast by $2bn this week on the back of the success of its weight-loss injection Zepbound and its diabetes drug Mounjaro, which are also in short supply because of a surge in demand. The Indianapolis-based company’s market value has jumped to nearly $740bn, far ahead of Tesla and Walmart.
Wegovy is available on the NHS and can also be bought privately at pharmacies. The list price for a month’s supply in the UK ranges from £73.25 to £175.80 depending on the dose.
Russ Mould, the investment director at the stockbroker AJ Bell, said: “Competition is growing in the market but demand is so high that Novo Nordisk is still racing to keep up with supplies, not fretting about what a rival like Eli Lilly is doing.
“However, the more products on the market and broader availability of each treatment, the greater the chance that prices will come down. This is already happening in the US. It means Novo Nordisk is facing the likelihood that weight-loss treatments become lower margin in time, hence why it needs to ramp up volumes as fast as possible as the dial shifts from earnings quality to earnings quantity.”
