- Sales and profit ahead of expectations
- Full year outlook raised
- Wegovy demand outstripping supply
Danish pharmaceutical giant Novo Nordisk (NOVO-B:CPH), known for its leading weight-loss drug Wegovy, delivered better than expected first quarter sales and earnings and raised its full year profit outlook.
After initially opening higher the shares fell back 2% on worries over lower pricing of Wegovy in the US and slower than expected growth in the obesity franchise.
Investor excitement about the market potential for weight-loss drugs has sent the shares soaring 55% over the last year, briefly making Novo Nordisk Europe’s most valuable company.
HOW DID NOVO PERFORM?
Sales increased 24% to DKK (Danish Kroner) 65.3 billion (£7.5 billion) in Q1, while sales of Wegovy more than doubled to DKK 9.38 billion and net profit increased 28% to DKK 25.4 billion, ahead of consensus forecasts of DKK 23.7 billion.
CEO Lars Fruergaard Jorgensen said: ‘We are pleased with the sales growth in the first three months of 2024, driven by increased demand for our GLP-1-based diabetes and obesity treatments.
‘More patients benefit from our innovative treatments, and the agreement to acquire the three Catalent manufacturing sites will enable us to serve significantly more people living with diabetes and obesity in the future.’
The company increased its sales growth outlook for 2024 to between 19% and 27% and upped its operating profit growth expectation to between 22% to 30% from 21% to 29%.
EXPERT VIEW
AJ Bell investment director Russ Mould commented: ‘For a company at the centre of the weight loss drug phenomenon, it’s ironic investors are judging Novo Nordisk by how much bacon it brings home. The market wants to see it fatten up profits and enjoy financial gains from others’ quest to drop the pounds.
‘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.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (James Crux) own shares in AJ Bell.
