Wegovy Sales Double to Boost Novo Nordisk's Fourth Quarter as Growth Set to Slow

Novo Nordisk anticipates slower growth in 2025 despite significant sales gains from Wegovy in Q4, amidst increasing competition from Eli Lilly.

Novo Nordisk, the Danish pharmaceutical giant known for its successful obesity drug Wegovy, has forecast a slowdown in growth for the upcoming year, despite impressive sales results for the fourth quarter of 2024. Wegovy sales more than doubled during this period, helping to lift the company’s overall performance. However, analysts and investors expressed mixed reactions as they continue to weigh the impact of increasing competition from rival Eli Lilly in the obesity drug market.

Strong Q4 Performance Amid Stiff Competition

Novo Nordisk’s forecast for 2025 expects sales growth in local currencies to be between 16% and 24%, which marks a slight decrease from the 26% growth seen in 2024 but aligns with analysts' expectations of around 20%. Despite concerns about a potential slowdown in demand for obesity drugs in the United States, Novo Nordisk's fourth-quarter earnings exceeded expectations, causing its stock to rise by 5.3%.

This growth is attributed largely to the continued success of Wegovy, which saw sales soar to 19.9 billion Danish crowns ($5.12 billion), more than double the 9.6 billion crowns generated in the same period the previous year. Analysts were cautiously optimistic, with Barclays analysts noting that the results were "good enough" to ease investor concerns, especially in light of competition from Eli Lilly’s obesity drug, Zepbound.

Since the launch of Wegovy in June 2021, Novo Nordisk’s stock has experienced a dramatic rise, increasing by roughly 60%. However, shares have dropped by approximately 40% from their peak in June 2024, fueling concerns about the future of the company’s growth as demand for obesity medications begins to plateau.

Rising Competition and Market Concerns

The competition in the obesity treatment market is intensifying, particularly with Eli Lilly’s Zepbound, which has been gaining traction in the U.S. market, the largest in the world. While Novo’s Wegovy remains a dominant force, the company lost ground to Eli Lilly in terms of total weekly prescriptions for weight-loss drugs in the fourth quarter. This reflects the increasingly competitive landscape in the weight-loss drug industry, which analysts estimate could be worth around $150 billion by the early 2030s.

CEO Lars Fruergaard Jørgensen, in a call with journalists, emphasized that demand for obesity treatments remains strong, not only in the U.S. but also in other global markets. His comments sought to reassure investors following concerns about a potential decline in the popularity of these medications, particularly in the U.S., where Eli Lilly had forecast a lower-than-expected fourth-quarter performance for Zepbound.

Looking Ahead: Challenges and Opportunities

Looking forward, Novo Nordisk faces some significant challenges, particularly in securing future growth as its patents for Wegovy and its diabetes treatment Ozempic are set to expire by 2032 in the U.S. The company is actively seeking new drug candidates to maintain its competitive edge and has been exploring various therapies. However, one of these candidates, CagriSema, recently underperformed in late-stage trials, causing the company’s stock to drop by as much as 27% in a single day.

Despite the disappointing trial results for CagriSema, Jørgensen remained confident in the drug’s underlying biology and was optimistic about its future prospects. This sentiment may help alleviate some investor fears and provide the company with time to secure alternative avenues for growth.

Novo Nordisk’s operating profit for the fourth quarter surged by 37% to 36.7 billion Danish crowns ($5.12 billion), surpassing analysts' expectations of 33.6 billion crowns. The company projects its operating profit for 2025 will increase by 19% to 27%, marking a slight decline from the previous year but still indicative of a solid performance.

Investor Sentiment and Future Outlook

Investors have shown mixed reactions, with some expressing cautious optimism about the company's future. Lukas Leu, a fund manager at Bellevue Asset Management, which holds Novo shares, described the mid-point of Novo’s sales growth outlook as reassuring, despite the broad range of expectations.

Overall, while Novo Nordisk’s strong performance in Q4 2024 provides some comfort, concerns about slowing growth and rising competition from Eli Lilly are likely to continue to dominate discussions in the months ahead. As the obesity drug market becomes increasingly competitive, Novo will need to innovate and adapt to maintain its leadership position in the industry.