Novo Nordisk, a Danish pharmaceutical company, announced its Q2 operating profit on Wednesday, falling short of expectations set by analysts. The profits totalled 25.9 billion Danish crowns (€3.5 billion), a 8% increase compared to the 27.3 billion Danish crowns projected in the London Stock Exchange poll. Following the announcement, shares dropped 3.2% in Frankfurt.
Despite this, 2024 sales forecasts were elevated, however, the profit guidance was marginally revised as competition from Eli Lilly grows within the weight-loss medication market. Currently, Novo Nordisk employs approximately 450 people in Ireland and has updated its local currency sales growth forecast to 22-28% for the current year, up from the initial estimate of 19-27%. CEO Lars Fruergaard Jorgensen expressed satisfaction with the first half of 2024’s sales growth, which has contributed to the revised full year outlook.
Nevertheless, the company’s forecast for local currency operating profit growth has been lowered from 22-30% to 20-28%. In June, the closure of an advanced kidney disease trial prompted an impairment loss of 5.7 billion Danish crowns, adversely affecting operating profit. This setback, coupled with lower than expected Q2 profits, could potentially escalate investor concerns about Novo’s competitive edge in the expanding obesity medication market.
Novo Nordisk’s first weight-loss offering, Wegovy, experienced weaker sales than expected – 11.66 billion Danish crowns, a 53% rise but less than the 13.54 billion estimated. Analysts predict that the worth of the obesity drug market could reach about $150 billion by the early 2030s.
Investor interests lie in Novo’s, Europe’s highest-valued listed company at $550 billion, future plans to enhance US supplies of Wegovy and overcome shortages. This comes as competitor Eli Lilly rapidly secures market share. In an effort to cater to the skyrocketing demand and counteract competition from Lilly’s new product Zepbound launched last December in the US, Novo Nordisk is investing billions of dollars to scale up Wegovy’s production.