Novo Nordisk (NVO) experienced a decline in its stock during premarket trading following disappointing second-quarter earnings that fell short of analyst expectations. The company’s revenue came in at $11.95 billion, slightly below the $11.97 billion anticipated by Wall Street. Its earnings per share (EPS) were reported at $0.93, falling short of the $0.95 estimate. Despite these setbacks, sales rose 16% year-over-year, driven significantly by its leading diabetes and weight-loss drugs, Ozempic and Wegovy, which generated approximately $7.9 billion, accounting for about two-thirds of the total quarterly revenue.
Recent challenges for Novo Nordisk include a downward revision of its 2025 revenue guidance, now projecting sales growth of 8%-14%, down from the previously anticipated 13%-21%. This adjustment is attributed to the impact of a growing number of compounded weight-loss drugs that mimic its semaglutide ingredient, leading to a competitive landscape that the company is addressing through legal action. As of now, Novo Nordisk has filed 14 additional lawsuits, bringing the total to 132 legal cases across 40 states aimed at halting the sales of these copycat products.
Outgoing CEO Lars Jørgensen highlighted that unauthorized semaglutide alternatives, particularly those produced in China and not properly quality controlled, are being used by over one million patients. He emphasized that these knockoffs are significantly affecting the company’s overall growth prospects.
Competitively, Novo Nordisk faces mounting pressure from Eli Lilly (LLY), which currently captures about 60% of new patient prescriptions despite Novo’s exclusive agreement with CVS for its weight-loss drug. Additionally, the potential for price negotiations for Ozempic and other drugs with Medicare next year presents another hurdle for the company.
The company is also under scrutiny from political figures, including a recent letter from former President Trump, asking 17 pharmaceutical companies, including Novo Nordisk, to disclose their lowest prices offered to developing countries for Medicaid populations. Jørgensen mentioned that Medicaid enrollees already benefit from lower pricing than that seen in Europe, but did not directly respond to the request regarding direct-to-consumer pricing specifics.
Despite these challenges, Novo Nordisk’s direct-to-consumer platform, NovoCare, launched in March, has demonstrated a promising 10% market penetration. This indicates a potential opportunity for the company to enhance its consumer engagement and expand its market presence moving forward.
In summary, while Novo Nordisk is currently navigating a period of significant challenges — including heightened competition, legal battles, and external pressures to adjust pricing — the underlying demand for its innovative products suggests a foundation for potential recovery and growth in the future.