- Growth outlook slashed
- US compounded products blamed
- New CEO appointed
Global weight-loss company Novo Nordisk (NOVO-B:DPH) saw more than £50 billion wiped off its market value on Tuesday (29 July) after issuing a second profit warning and announcing a new chief executive.
The shares fell as much as 28%, taking them to their lowest level since 2022, with the company losing its status a Europe’s largest company. The warning had a knock-on effect on Novo’s US rival Eli Lilly (LLY:NYSE), which fell 5% in early trading.
GROWTH OUTLOOK SLASHED
In an unscheduled trading statement, Novo Nordisk slashed its expectations for full year sales growth to a range of 8% to 14% from 13% to 21% in May and now sees lower operating profit growth of between 10% 16%, from 16% to 24% previously.
The company laid the blame on lower growth for its obesity drug Wegovy in the US due to the ‘persistent use of compounded GLP-1s,’ slower than expected market penetration, and competition.
In addition, the Danish firm sees lower US penetration of its diabetes treatment Ozempic and lower than expected penetration of Wegovy across 10 select markets.
Compounded products are medicines which have the same active ingredients but are not FDA (Food and Drug Administration) approved but allowed during periods of drug shortages.
Portfolio manager Marcus Manns at Union Investment commented: ‘While most people had expected Novo to just trim the top end of the guidance, the magnitude of the guidance cut is a shocker.
‘Novo has underestimated the self-pay market in obesity and just recently started to focus on this important patient segment,’ said Manns.
UNSAFE USE
In a statement Novo said: ‘Despite the expiry of the FDA grace period for mass compounding on 22 May 2025, Novo Nordisk market research shows that unsafe and unlawful mass compounding has continued, and that multiple entities continue to market and sell compounded GLP-1s under the false guise of “personalisation”.’
In a separate announcement, the company appointed company insider Mike Doustdar as its new CEO, effective 7 August. Doustdar is currently Novo Nordisk’s executive vice president of International Operations, and has a strong track record of creating value and driving growth according to the group.
