Novo Nordisk, the Danish pharmaceutical company, announced on Thursday that it had raised its full-year outlook for the second time this year, as its sales and profits were boosted by the strong demand for its diabetes and obesity drugs, especially Wegovy, a new weight-loss injection. However, the company also said that it would continue to limit the supply of starter doses of Wegovy in the US market, as it was facing capacity constraints and wanted to ensure the continuity of care for existing patients.
Wegovy: A Breakthrough in Obesity Treatment
Wegovy is a once-weekly injection that contains semaglutide, a glucagon-like peptide-1 (GLP-1) receptor agonist that helps regulate appetite and blood sugar levels. The drug was approved by the US Food and Drug Administration (FDA) in June 2023 as an adjunct to diet and exercise for chronic weight management in adults with obesity or overweight with at least one weight-related comorbidity.
Wegovy has shown remarkable efficacy in clinical trials, helping patients lose an average of 15% of their body weight after 68 weeks of treatment, compared to 2.4% for placebo. The drug also improved other health outcomes, such as blood pressure, cholesterol, and quality of life. Wegovy is the first drug to achieve the FDA’s efficacy benchmark of at least 5% weight loss in more than one-third of patients.
Wegovy is a game-changer in the obesity treatment market, which is estimated to be worth $24 billion by 2026. Obesity affects more than 650 million adults worldwide and is associated with increased risks of diabetes, cardiovascular diseases, cancers, and other health problems. However, current obesity treatments are either ineffective, invasive, or have serious side effects.
Wegovy has been met with huge demand from patients and doctors in the US, where more than 40% of adults are obese. The drug is priced at $1,300 per month, which is higher than other obesity drugs but lower than bariatric surgery. Novo Nordisk expects Wegovy to generate annual sales of more than $10 billion in the US alone.
Supply Constraints and Proration
However, Novo Nordisk is also facing challenges in meeting the soaring demand for Wegovy in the US market. The company said that it had limited production capacity for the drug and that it was working to expand it gradually. The company also said that it had received interest from several potential strategic and financial partners who could help it increase its supply capacity.
In order to manage the demand-supply dynamics and ensure the continuity of care for existing patients, Novo Nordisk said that it would continue to restrict the supply of starter doses of Wegovy in the US market. The company had introduced this measure in May 2023, halving the supply of starter doses for several months. The starter dose is a lower dose of semaglutide that patients take for four weeks before switching to the maintenance dose.
The company also said that it would apply a proration factor to the exchange offer for its existing diabetes drug Ozempic, which contains the same active ingredient as Wegovy but at a lower dose. The exchange offer allows Ozempic patients to switch to Wegovy at no additional cost. The proration factor means that only a fraction of the Ozempic doses tendered for exchange will be accepted.
The proration factor will not apply to odd-lot holders, who are patients who own less than 100 doses of Ozempic. These patients will be able to exchange all of their doses for Wegovy without being subject to proration. This is a special feature of the exchange offer that gives priority to small patients over large ones.
Strong Financial Performance and Outlook
Despite the supply constraints, Novo Nordisk reported a strong financial performance for the second quarter of 2023. The company’s sales increased by 19% in local currencies to 35.3 billion Danish crowns ($5.6 billion), driven by a 26% growth in its GLP-1 segment, which includes Ozempic and Wegovy. The company’s operating profit increased by 29% in local currencies to 15.7 billion crowns ($2.5 billion), reflecting its operational leverage and cost efficiency.
Based on its strong performance and growth prospects, Novo Nordisk raised its full-year outlook for 2023 for the second time this year. The company now expects sales growth of 27-33% in local currencies, up from 18-24% previously. The company also expects operating profit growth of 31-37% in local currencies, up from 22-28% previously.
Novo Nordisk’s CEO Lars Fruergaard Jorgensen said that he was “very pleased” with the results and that he was “overwhelmingly bullish” about the future of the company. He said that Novo Nordisk was serving more patients than ever before with its GLP-1-based diabetes and obesity treatments, and that it had a strong pipeline of new products and indications.
