Novo Nordisk’s semaglutide brands Ozempic and Wegovy fell short of analyst expectations in the second quarter, mainly held back by supply headwinds. The company’s shares dropped more than 7% in Wednesday morning trading.
Novo Nordisk released its second-quarter earnings on Wednesday, revealing an overall downward adjustment to its full-year operating profit growth forecast, while raising its expected 2024 sales growth.
In Q2, Novo recorded net sales of nearly $10 billion, up 25% at constant exchange rates from its sales of almost $8 billion during the same period in 2023. CEO Lars Fruergaard Jørgensen in a statement said that the pharma is “pleased” with its performance in the first half of the year, touting the “increased demand for our GLP-1-based diabetes and obesity treatments.”
However, investors were not as pleased with the Q2 results as Novo’s shares dropped more than 7% in Wednesday morning trading, according to Reuters.
The investor pullback was driven by disappointing sales of Novo’s powerhouse brands for semaglutide—Ozempic for type 2 diabetes and Wegovy for chronic weight management. In Q2, Wegovy’s sales surged 53% to $1.7 billion but fell far below analyst forecasts of nearly $2 billion, according to Reuters. Ozempic, which jumped 30% to $4.23 billion, also missed analyst estimates.
The company’s overall earnings in the quarter also missed analysts’ expectation of $10.9 billion, according to SeekingAlpha.
Several factors could have played into Novo’s weaker-than-expected Q2 performance, not least of which are the supply issues that have left several doses of Wegovy and Ozempic in shortage for months. In its Wednesday announcement, Novo acknowledged that the growth in sales of its GLP-1 products has “resulted in periodic supply constraints and related drug shortage notifications” across various markets.
At the same time, Novo is pulling its regulatory submissions to expand the use of Wegovy for a common type of heart failure. The company will reapply to expand Wegovy’s label early next year when it has more data, executives said on Wednesday’s analyst call.
In the U.S., “demand for Wegovy exceeds supply” which has pushed the drugmaker to cap the initiation dose strength of the treatment. “Novo Nordisk is investing in internal and external capacity to increase supply both short and long term,” the company said. These efforts include the $16.5 billion acquisition of contract manufacturer Catalent in February 2024 and the $4.1 billion investment in its North Carolina footprint in June 2024.
Novo’s efforts appear to have started to pay off, with supply lines starting to stabilize. On Tuesday, the FDA updated its drug shortage database showing that all but one of semaglutide’s doses are available.
Still, the Danish pharma on Wednesday also lowered its full-year operating profit growth guidance to reflect “expected continued periodic supply constraints” and shortages. Novo now expects a profit growth range of between 20% and 28%, down from a previous projection of 22% to 30%.
Despite supply headwinds, Novo remains optimistic about its sales driven by the “steady volume growth” of its GLP-1 portfolio. The pharma increased its full-year sales growth forecast to a range of between 22% to 28%, versus its previous guidance of 19% to 27%.
