Novo Nordisk Shares Plummet as Competition Weighs on Sales
Sales of Wegovy are being dented by generic competition. – hollie adams/Reuters
Shares in Novo Nordisk plunged after it cut its guidance, a result from the company losing its lead in the booming market for weight-loss drugs, opening the door to competitors such as makers of knockoff versions of Novo’s drugs and pharmaceutical giant Eli Lilly.
Company shares plunged as much as 30%, at one point wiping out almost $93 billion of Novo Nordisk’s market capitalization, after the Danish drugmaker said headwinds for its blockbuster drugs Ozempic and Wegovy would cut its sales growth for the year, the latest in a series of challenges facing the once-highflying company.
Novo, which once helped carve out the multibillion-dollar anti-obesity market, is struggling to return to its heyday of rapid growth. To help revamp the company, Novo on Tuesday announced a new boss, naming Maziar Mike Doustdar as chief executive officer, effective Aug. 7. Doustdar will succeed Lars Fruergaard Jorgensen, who Novo said in May would step down.
“I come to this role with a sense of urgency, a laser focus on high performance,” Doustdar said on a conference call Tuesday.
The new CEO will face a challenging landscape after several missteps from the company. He will have to figure out how to stop Lilly from taking more market-share in the brand-name weight-loss drug market. And he will have to become more aggressive in trying to counter the compounding pharmacies whose lower-cost, copycat versions of Novo’s drugs have remained popular despite regulatory restrictions.
But company executives believe his experience will help the company prevail. Doustdar has over 30 years of service at the company and currently heads up its international operations.
“Mike has consistently demonstrated the ability to drive growth through strong commercial execution and building high-performing teams,” Chairman Helge Lund said. “This is an important moment for Novo Nordisk.”
Lund also called Doustdar a “natural challenger” with a “bias for speed.”
Doustdar, an Iranian-born Austrian national who grew up in the U.S., said he would seek to improve Novo’s position in markets for diabetes and obesity drugs and its commercial execution. He also plans to realign the company’s costs after a period of rapid growth.
Booming sales of Novo’s drugs had pushed its stock-market valuation to become the highest in Europe at times in recent years, eclipsing luxury-goods maker LVMH and Denmark’s gross domestic product. Its size even caused Denmark’s central bankers to keep interest rates lower than the rest of Europe.
But challenges for Novo also emerged. The company stumbled soon after Wegovy hit the market because it wasn’t able to make enough to satisfy booming demand, and supply shortages dogged the drug’s rollout. Compounding pharmacies were then able to mass produce copycat versions of Wegovy because federal law permits that when a shortage is in effect.
The compounding competition grabbed market share, and many of these products have remained available even after Novo resolved the shortage. Novo has taken legal action against many pharmacies to try to stop production.
Aside from knockoffs, Novo also faces stiff competition from Lilly, whose weight-loss drug Zepbound and diabetes drug Mounjaro have surpassed Novo’s drugs in U.S. prescription volume. Novo also faces the prospect that other companies will enter the market with weight-loss drugs that are in development.
“It seems Novo is really just struggling when it comes to all the potential ways they can accelerate their business,” said Evan David Seigerman, a biopharma analyst at BMO Capital Markets.
Novo now expects full-year 2025 sales growth of 8% to 14%, down from a prior forecast range of 13% to 21%. The company also said its operating profit growth would be lower than its previous forecast. It is the second time this year the company has lowered its financial forecast.
Novo blamed its diminished outlook partly on availability in the U.S. of copycat versions of its weight-loss drug Wegovy. The company said that despite U.S. regulators recently ordering an end to the practice known as compounding, it has continued, with multiple entities still marketing and selling unbranded versions of semaglutide, the main ingredient in both Wegovy and diabetes treatment Ozempic.
The company said about one million patients continue to take compounded versions of semaglutide in the U.S. It had previously assumed that the number would decline, but it hasn’t.
“Novo Nordisk is pursuing multiple strategies, including litigation, to protect patients from knockoff semaglutide drugs,” it said.
The company called for federal and state regulators and law enforcement to intervene, as it warned that the inauthentic ingredients used in compounded drugs pose a danger to patients.
Competition and slower sales growth of its Ozempic diabetes drug in the U.S. also dragged on its results, the company said.
Novo’s shares were down 21% in early trading Tuesday. At Monday’s close, Novo’s American depositary receipts were down about 20% year-to-date.
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