Novo Nordisk CEO Mike Doustdar conceded that Eli Lilly has been gaining market share in the GLP-1 market and is more diversified than his company, even as Novo raised its full-year sales guidance. The admission came as shares dropped roughly 6% on the day of the announcement.
A guidance raise that didn't move the needle
Novo narrowed its projected annual decline from 8% to 3% at the midpoint on August 4. That's a meaningful improvement, but investors weren't impressed. The stock fell anyway, a sign that the market is focused on the competitive pressure from Lilly rather than the better-than-expected outlook.
The price cut trade-off
Novo slashed prices on Ozempic and Wegovy last year to widen patient access. The move was meant to boost volume, but that volume hasn't caught up yet to offset the cuts. That's why the guidance raise is modest, and why the company is still projecting a decline in sales for the year.
Oral Wegovy's fast start
The pill version of Wegovy launched in January and quickly became one of the fastest-selling drugs in pharmaceutical history. Doctors have written more than 5 million prescriptions, and 1.5 million patients now take it worldwide. Doustdar called it the best product launch in pharmaceutical history. The pill cuts weight by 17% in Novo's own trials, against 12% for Lilly's rival pill, though the two drugs haven't faced off head-to-head.
The Lilly rivalry
Doustdar acknowledged that Lilly is more diversified. Novo's obesity and diabetes drugs now make up around 90% of its business, compared to about 60% at Lilly. That concentration makes Novo more exposed to the GLP-1 market's ups and downs. Novo is also suing Lilly over advertising claims that compare an older, lower-dose version of Wegovy. Novo's newer high-dose formulation matches Lilly's efficacy, according to Doustdar.
Doustdar is betting that two straight quarters of improving trends will eventually pull the stock along. The next earnings report will show whether that bet is paying off.
