Novo Nordisk’s (NVO) investors are worried its competition with Eli Lilly (LLY) is heating up and that the first-to-market GLP-1 leader is losing ground.
Even with 72% of the global market share, the competition in the US has been pressuring the company’s stock in recent months. It is no longer Europe’s most valuable company, and the stock is down more than 22% year to date. Lilly’s Zepbound overtook Novo’s Wegovy as the leading obesity drug, according to the latest prescription data last month.
But Novo CEO Lars Jørgensen attributes the softness in sales to the copycats from compounding pharmacies, which have been allowed on the market due to the shortage that constrained the market in the past couple of years.
The compounding business is “approximately as big as our own business, which is quite surprising in many ways,” Jørgensen told Yahoo Finance in an interview Wednesday. Novo reported Wegovy and Ozempic combined sales of more than $7.5 billion.
There is no public data available about the revenues and market size for compounding, but a 2024 estimate from the Outsourcing Facilities Association, the trade group representing compounding pharmacies, showed 80 million prescriptions for copycat semaglutide were filled in the past year.
That, Jørgensen said, is why the company missed its Wegovy sales estimates by 7% in first quarter earnings Wednesday.
The good news: The FDA recently removed semaglutide — the key ingredient in Wegovy — from its shortage list, which is why Novo has forecast relief in the second half of the year. But it still cut its sales guidance by 3%.
Boost access to boost sales
Meanwhile, Novo has been busy forging deals with telehealth platforms, like Hims & Hers (HIMS), to increase access to Wegovy.
Novo also scored an exclusive deal to be listed as the preferred weight-loss drug for coverage on CVS’s (CVS) formulary. This caused Lilly’s stock to tank last week, but Jørgensen said CVS approached his company for the deal, not the other way around.
“We have not made a bid for an exclusive position,” he said.
Investors worried it would launch a price war.
“Some have been worried a price war was coming up; we are not going for that. We believe in choice for physicians and patients,” Jørgensen said.
But will it help boost prescriptions for Wegovy? Investors are waiting to find out.
Jørgensen said his goal is to meet the patients where they are, as they showed a propensity toward any and all available access points and were willing to pay cash.
That’s also why CVS, in addition to the formulary, is going to offer Wegovy for $499 per month for cash-paying customers, the same price available through the telehealth platforms.
Whether these strategies help boost sales for the rest of the year remains to be seen. Mizuho’s Jared Holz said the CVS deal will be one to watch, to see if it winds up being significant or not.
Meanwhile, the competition between the two market leaders is set to heat up in a new area. Novo is trying to be first to market again with a pill version of Wegovy. The FDA has until later this year to allow or deny the drug. Lilly’s orforglipron, meanwhile, is expected on the market next year.
Jørgensen said he expects the FDA review to go smoothly since the company already has Rybelsus, a prior-generation semaglutide pill, on the market.
“So from a risk and FDA point of view, I think perhaps this is one of the easier reviews,” he said.
Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. That includes GLP-1s, of course. Follow Anjalee as AnjKhem on social media platforms X, LinkedIn, and Bluesky @AnjKhem.
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