Wegovy maker Novo’s profit warning wipes out $70B – Business News
Investors wiped $70 billion off Novo Nordisk’s market worth on Tuesday after the maker of weight-loss drug Wegovy issued a profit warning and named a new CEO, because it battles rising competitors within the weight problems drug market.
Novo named Maziar Mike Doustdar as its new chief govt, turning to a veteran insider to revive gross sales and reassure traders rattled by fears the Danish drugmaker is dropping ground within the weight problems drug race it began.
Doustdar’s appointment didn’t stem a stock market rout sparked by Novo slashing its outlook for 2025 gross sales growth to between 8% and 14%, from between 13% and 21% beforehand. Its shares plunged almost 30% earlier than paring some losses to commerce down over 20% by mid-afternoon. The shares are actually down 44% this 12 months.
Wegovy maker Novo Nordisk is battling rising competitors within the weight problems drug market. Patrick Bay Damsted – stock.adobe.com
“The magnitude of the guidance cut is a shocker,” Markus Manns, a portfolio supervisor at mutual fund firm Union Investment, a Novo shareholder, instructed Reuters, including that Novo’s points went deeper than “compounded” copycats to Wegovy.
Compounded medication are custom-made medicines which might be based mostly on the identical ingredients as branded medication.
Novo has been hit by copycats of its GLP-1 medication Wegovy for weight-loss and Ozempic for diabetes. US law bars pharmacies from replicating permitted medication, however has allowed ‘compounding’ for sufferers needing {custom} doses or formulations.
The company mentioned in a assertion that it cut its 2025 gross sales outlook attributable to decrease growth expectations within the second half within the US, each for Wegovy and Ozempic within the GLP-1 diabetes market.
The drugmaker, which turned Europe’s most beneficial listed company following the launch of Wegovy in 2021, is now going through a reckoning because it seems to be to show issues round after the abrupt elimination in May of CEO Lars Fruergaard Jorgensen.
Novo, which turned Europe’s most beneficial listed company following the launch of Wegovy in 2021, is now going through a reckoning because it seems to be to show issues round after the abrupt elimination in May of CEO Lars Fruergaard Jorgensen. REUTERS
At its peak in June 2024, Novo was value as a lot as $615 billion, however its shares have plunged on investor issues concerning the company’s experimental drug pipeline and its capacity to navigate challenges within the US market.
“The stock has gone from being a market darling to one of its biggest letdowns,” mentioned Angelo Meda, portfolio supervisor and head of equities at Banor SIM in Milan, which has a small Novo stake. “The biggest concern is the illegal channel siphoning away market share – something that’s hard to quantify. Rebuilding trust will take time.”
New CEO an insider
Doustdar, an Iranian-born, Austrian national, who grew up within the United States, joined Novo in 1992 and can tackle the new position on August 7.
He at the moment serves as vice president for worldwide operations, a position he took after main the company’s companies first within the Middle East after which in Southeast Asia, Novo mentioned.
Novo has been hit by copycats of its GLP-1 medication Wegovy for weight-loss and Ozempic for diabetes. Tobias Arhelger – stock.adobe.com
“We need to increase the sense of urgency and execute differently,” Doustdar instructed traders and analysts on a call. “The fact that my announcement comes right after the guidance update, just makes the mandate ahead even more clear.”
Some analysts and traders had argued that Novo ought to choose an American, or a particular person with in depth expertise working within the United States as its subsequent CEO. Novo has misplaced its first-mover benefit within the United States this 12 months to rival Eli Lilly.
The new chief govt’s most pressing problem, in keeping with traders and analysts, is to revive Novo’s efficiency within the United States, the most important market by far for weight-loss medication and the place they’re most profitable.
Novo launched its weight-loss drug Wegovy almost two and a half years earlier than Eli Lilly’s Zepbound. But Zepbound prescriptions surpassed these of Wegovy this 12 months by more than 100,000 a week.
Novo launched its weight-loss drug Wegovy almost two and a half years earlier than Eli Lilly’s Zepbound. But Zepbound prescriptions surpassed these of Wegovy this 12 months by more than 100,000 a week. REUTERS
In May, Novo mentioned it anticipated many of the roughly a million US sufferers utilizing compounded GLP-1 medication to change to branded remedies after a Food and Drug Administration ban on compounded copies of Wegovy took impact on May 22.
“Unfortunately, our latest market research indicates that has not happened,” Chief Financial Officer Karsten Munk Knudsen mentioned on a call with analysts on Tuesday. One million or more US sufferers are nonetheless utilizing compounded GLP-1s, he mentioned.
Novo has stepped up its dialog with the US FDA to restrict illegal compounding of its medication, the pinnacle of US operations David Moore added on the call. “Compounding continues to be an issue that we have to address,” Moore mentioned.
