Shares of Denmark's Novo Nordisk, the developer of the obesity drug "Wegovy (semaglutide)," plunged after it noted a possible sales decline this year. The drop was seen as stemming from intensifying competition in the obesity drug market and pressure from the U.S. Trump administration to cut drug prices.
On the 3rd (local time), Novo Nordisk said in its earnings release that "sales could fall by as much as 13% this year." The company said it faces a situation where it has no choice but to lower the price of weight-loss treatments as competition in the obesity drug market overheats and the U.S. government continues to pressure drug price cuts.
Novo said last year's annual sales hit a record 309.1 billion kroner (about 71 trillion won), up about 10% from a year earlier. Operating profit also rose about 6% to 127.7 billion kroner, but it slightly missed market expectations (about 130 billion kroner).
The concern is the outlook. The company projected that in 2026, sales and operating profit will decline 5% to 13% from the previous year on a constant-currency basis. As competition in obesity treatments grows fiercer and U.S. pressure to cut drug prices mounts, price reductions are inevitable, which could lead to weaker results.
Mike Doustdar, Novo Nordisk's chief executive officer (CEO), said, "This year we will face significant headwinds on pricing."
After the outlook was released, Novo's share price on the New York stock market tumbled 14.64% from the previous day to close at $50.30. Lars Hitting, head of trading at Artaskov, a Novo investor, said the company "faces significant challenges," adding, "Even the most skeptical analysts probably did not expect a drop of this magnitude."
Industry watchers say the "Novo shock" underscores the intensifying competition in the fast-growing obesity drug market. The diabetes treatment "Ozempic," which has the same ingredient as Wegovy, is locked in fierce price competition in the U.S. market with Eli Lilly and Company's obesity drugs "zepbound (tirzepatide)" and "Mounjaro."
Patent expiration risks have added to the pressures. The patent for semaglutide, the key ingredient in Wegovy and Ozempic, is set to expire this year in several countries, including China, Brazil and Canada. With the likelihood of generics emerging in overseas markets growing, price-cut pressure is inevitably set to intensify.
In response, CEO Doustdar is pursuing restructuring and a performance-centered corporate culture. In an interview with Bloomberg TV, he said, "Financially, we may see negative growth, but in other aspects of the business we are seeing a lot of positive growth," highlighting the performance of the recently launched oral obesity treatment, the so-called "Wegovy pill version." He cited sustaining change and strengthening new drug development capabilities as the company's top priorities.
Novo also unveiled a strategy to use the Wegovy pill to stay ahead of generic makers. According to Chief Financial Officer (CFO) Knudsen, more than 170,000 patients have started taking the drug since launch, which he called "one of the strongest launches in this market." The company said the product is expanding the market itself rather than cannibalizing sales of the existing injection.
However, if Eli Lilly and Company soon launches an oral obesity treatment, analysts say it will be difficult to guarantee dominance in this field. As the obesity drug market continues to grow, global pharmaceutical companies are finding it increasingly difficult to meet heightened investor expectations.
In fact, Pfizer also announced phase 1/2 results for Mesera's long-acting obesity treatment "MET-097," which it acquired for $10 billion, but the market reaction was tepid. Investors said the 12.3% weight-loss rate versus placebo after 28 weeks of dosing "is not enough to threaten zepbound (about 16%) or Wegovy as a latecomer." Pfizer shares fell 3.5% on the day.
Novo said it plans to begin a new share buyback of up to 15 billion Danish kroner (about 3.4 trillion won). Management changes are also underway. Dave Moore, who led the U.S. business for a year, is leaving the company, and Jamie Miller, formerly of UnitedHealth Group in the United States and GSK plc in the United Kingdom, will join as his successor. The company also hired Hong Chow, who was head of Merck Healthcare China under Germany's Merck, to lead product and portfolio strategy.