Danish pharma giant Novo Nordisk on Wednesday reported better-than-expected earnings for 2023, propelled by a tsunami of demand for its blockbuster weight loss and diabetes drugs as new treatments emerge and compete for a slice of the growing market.
Sales of Wegovy, an injectable prescription weight loss medicine, has helped boost profits for Novo Nordisk.
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Key Takeaways
- Novo Nordisk reported $33.7 billion of sales for 2023, an increase of 36% at constant exchange rates and beating analysts’ expectations.
- Full-year operating profit also exceeded analysts’ expectations, climbing 44% at constant exchange rates to $15 billion.
- Diluted earnings per share rose 52% to 18.61 Danish kroner ($2.7).
- Around 90% of the drugmaker’s overall sales—$31.2 billion—came from its obesity and diabetes care division, which includes Ozempic and Wegovy, respectively authorized to treat diabetes and obesity.
- Sales of GLP-1 diabetes medications—a class that includes Ozempic—and in obesity care were largely responsible for this uptick, Novo Nordisk said, rising 52% and 154% at constant exchange rates, respectively.
- Novo Nordisk shares rose around 4% during early trading on Wednesday morning.
Crucial Quote
“We are very pleased with the strong performance in 2023 reflecting that more than 40 million people are now benefiting from our innovative diabetes and obesity treatments,” said CEO Lars Fruergaard Jorgensen. “Our focus in 2024 will be on reaching more patients, progressing and expanding our pipeline as well as the continued significant expansion of our production capacity.”
News Peg
The stellar success of Ozempic and Wegovy—both branded drugs containing the same active ingredient, semaglutide—has rapidly propelled Novo Nordisk into a rarified club of extraordinarily valuable companies and triggered an acknowledged period of unusual growth for a company of its size. It now has a market value of around $480 billion, up from around $310 billion at the start of 2023, $250 billion at the start of 2022 and around $160 billion at the start of 2021. With such fast growth, Novo Nordisk recently dethroned French luxury goods firm LVMH as Europe’s most valuable public company and its market value is larger than the annual economic output of its home country, Denmark. Officials there are reportedly worried over the country’s reliance on a single firm and fear of falling into the same trap as Finland when it hitched its wagon to erstwhile phone giant Nokia.
Key Background
Semaglutide mimics the action of a hormone—GLP-1—that is responsible for regulating appetite and blood sugar. It has been shown to help facilitate weight loss and studies suggest it could bestow other health benefits in areas like heart and kidney disease as well. While it is far from the first drug shown to reduce weight, it does not appear to be accompanied by the same litany of often serious side effects as previous generations of weight loss drugs.
Experts have therefore hailed it as a breakthrough in the fight against obesity, one of our era’s most pressing public health problems. For several years, Novo Nordisk has been the sole provider of GLP-1 generation of weight loss drugs and it has heavily struggled to meet booming demand. It was recently joined by Eli Lilly, whose Zepbound injections—a branded name for tirzepatide, the same ingredient in its diabetes drug Mounjaro—are also expected to become bestsellers. Analysts believe the anti-obesity market could become one of the most lucrative opportunities for the pharmaceutical sector in its history and could potentially be worth as much as $100 billion by the end of the decade and possibly much more. Adjacent industries like wellness, food, and fitness are reportedly concerned the popularity of weight loss drugs will eat into revenues.
What To Watch For
Novo Nordisk said it expects solid growth for the year ahead as well, with sales expected to climb as much as 26% and operating profit as much as 29% at constant exchange rates.
This article was first published on forbes.com and all figures are in USD.
