NVO FH25 RESULT --Weight loss investment case slimming down?

 NOVO NORDISK Q2/FH 25 RESULT

NVO has been hit with a confluence of growth issues. Whether these prove to be temporary or not will determine whether NVO will be a good investment or not. The below table annualises FH25 growth and clearly shows the issues. The main issue is growth for Wegovy and Ozempic in the NA market. The total here reflects guidance mid point, the rest of NVO is not going to grow 18%, so the balance is expected revival in the NA category. will this happen? Wegovy and Ozempic were about 65% of total revenues FH25. NA 44% and International 20%.

Note although Ozempic is a diabetic drug, off label use for weight loss is huge.

	2023	2024	2025
Wegovy
NA	380%	59%	6%
IO	3443%	497%	113%
Ozempic
NA	64%	32%	-2%
IO	52%	10%	35%
Rest of NVO	-3%	6%	18%
TOTAL	38%	26%	18%

 

The issues in importance IMO opinion are;

1.      Compounders in the NA market. The FDA allowed generics into the market when NVO and LLY couldn’t meet demand. In May that was reversed but the compounders have continued under what they perceive as loopholes in the legislation. Clearly this is a big issue and a bigger one if NVO, and other pharma, cannot defend their patents. Legal, long, expensive and uncertain appears the most likely route at this stage.

2.      LLY’s tirzapititde has, in general, shown greater efficacy than NVO semaglutide products. However this is not significant but opens the door for some share loss. Over time there could easily be a swing back, especially as indications and product delivery expand.

3.      Reimbursement and the greater affordability of GLP-1 has been an issue. There is no doubt that prices will erode over time and different market segments are targeted at lower prices. The entry of other players, the size of this market and the participation of more of a consumer market has made this more of an issue. Compliance appears to be an issue as well maybe tied to affordability. More marketing dollars are needed given the consumer reliance of GLP-1’s. that is costly.

4.      There are pharma industry and geopolitical concerns that exist but are more generic, imo.

What are the positives.

NVO need to limit patent infringement that is the biggest issue for me. Most compounders are in semaglutide not the LLY product so ti is a NVO issue more than any other. Although a favourable resolution for NVO would appar to be the base case, we need to see progress here.

The abiltiy to match LLY in efficacy will likely wax and wane. The last set of results favour NVO in oral but I expect them to fight it out with no clear LT winner. Especially as the market fragments into various sizes, uses and other indications. A fair fight will see NVO hold its ground is the base case.

The International business is about 20% of sales compared to 44% for NA. with supply now online, international is growing much faster. Ok to small to be a saviour but NVO has a great international distribution channel and perhaps equal or better than LLY. NVO has the first mover advantage and stronger brands in the space that will count in the international markets, imo.

Capex has been huge to fill out manufacturing capacity. With capex to sales over 2X normal levels. With that now largely done we should see FCF increase. NVO B/S is quite strong regardless. A turning point in FCF is coming.

The market remains huge and potential growth is large for the incumbents. There is the looming EOL but that is still in next decade. The market growth has slowed as reimbursement and compliance is dealt with. Unless these issues prove insurmountable growth at some stage will resume. There is likely to be a growth/price trade-off.

NVO is a medium position it could be increased significantly at around the current SP or even well above it. Some positive movement on the above issues are required.

 

Lars Fruergaard Jorgensen CEO ex

In the first 6 months of 2025, we delivered 18% sales growth and 29% operating profit growth. As announced last week, Novo Nordisk has lowered the full year outlook for 2025 compared to the outlook issued in May of this year.

The change in sales outlook for 2025 is driven by lower growth expectations for the second half of 2025. This is related to lower growth expectations for Wegovy in the U.S. obesity market, lower growth expectations for Ozempic in the U.S. GLP-1 diabetes market, as well as lower-than-expected penetration for Wegovy in select IO markets.

I'd like to go through the performance highlights across our strategic aspirations before handing over the word to my colleagues.

Starting with our focus on purpose and sustainability, we are now serving almost 46 million patients with our diabetes and obesity treatments. This is an increase of more than 3.5 million patients compared to the first 6 months of 2024.

In R&D, Ozempic received a positive opinion by the EMA for the treatment of peripheral arterial disease in people living with Type-2 diabetes. Within obesity, we announced that subcutaneous and oral amycretin for weight management will advance into Phase III clinical development.

Further, we initiated a new Phase IIIb trial, REDEFINE 11. The trial lasts for 80 weeks and investigates further potential efficacy and safety of CagriSema.

Finally, we have entered an exclusive collaboration and license agreement with Septerna to discover and develop all small molecules for the treatment of obesity, Type-2 diabetes and other cardiometabolic diseases.

Ludovic Helfgott strategy

The volume of compounding GLP-1s in the U.S. is estimated to have impacted the uptake of Wegovy prescriptions, as well as the growth of the branded obesity market during the first half of 2025.

David S. Moore US

Sales of GLP-1 diabetes care products in the U.S. increased by 9% in the first 6 months of 2025. The sales increase was driven by continued uptake of Ozempic, partially countered by Victoza and Rybelsus. Ozempic sales in the U.S. were positively impacted by gross to net sales adjustments related to prior years.

The weekly Ozempic prescriptions are currently around 690,000 and in standard units. While the full impact of the chronic kidney disease indication has yet to be fully realized. This includes Ozempic in the cash channel, which we anticipate launching later this year.

Wegovy sales increased by 37% in U.S. operations in the first 6 months of 2025. The Wegovy sales growth was driven by increased volumes partially countered by lower realized prices. And Wegovy has around 280,000 weekly prescriptions.

despite the expiration of the FDA grace period for mass compounding on May 22, Novo Nordisk market research shows that unsafe and unlawful mass compounding has continued. Multiple entities continue to market and sell compounded GLP-1s under the false guise of personalization, and it is estimated to be around 1 million patients are on compounded GLP-1s in the U.S.

As unsafe and unlawful mass compounding continues, the Wegovy penetration within the cash channel has been lower than expected.

Novo Nordisk launched NovoCare Pharmacy in March 2025, and the penetration of Wegovy within the cash channel is now around 10% of total prescriptions.

Within the insured channel, Novo Nordisk expects a volume contribution from changes to the CVS National Template Formulary. This went into effect on July 1, 2025, where Wegovy is now the only GLP-1 medicine covered for obesity.

Although compounding persists, we do see positive early indicators in recent weeks of prescription data that we believe is driven by CVS Formulary decision as well as recent commercial efforts. We remain focused on driving commercial execution, which includes refining our messaging, launching new initiatives and pursuing additional indications over the course of this year.

Maziar Mike Doustdar CEO elect

Sales in IO grew by 19% in the first 6 months of 2025, driven by GLP-1 products. GLP-1 diabetes sales increased 10%. This growth was negatively impacted by periodic supply movements. Our GLP-1 diabetes sales in Region China was also lower than expected, mainly because of the wholesaler inventory movements and timing.

Having said that, Obesity care sales grew in IO by a very strong percentage. We grew the sales by 125% to DKK 13.9 billion. And if you discount for Saxenda and look at the sales at Wegovy alone, we have now reached more than DKK 12.2 billion, growing at an impressive rate of 335% by all the regions.

Novo Nordisk remains the market leader in IO with the total diabetes and obesity GLP-1 volume market share of 71%. Simply put, almost 3/4 of people that use GLP-1 products in IO are on a Novo-Nordisk GLP-1 product. With improved supply for both Ozempic and Wegovy and connected to that increased investments and higher innovation -- higher activations of commercial activities, we will accelerate our launches and further advance our GLP-1 leadership.

Meanwhile, Ozempic remains the leading GLP-1 diabetes product within IO, having launched in around 80 markets. We have now launched Wegovy in around 35 countries, including more than 15 new launches just this year

Ludovic Helfgott Strategy

Over 550 million people live with Type-1 and Type-2 diabetes globally and over 900 million people live with obesity. In both cases, most of these people reside outside of the United States. Despite the prevalence of diabetes and obesity, more effort is required to help people get our innovative medicines.

In diabetes, as an example, through -- though a patient can have more than one prescription, only 7% of total estimated prescriptions are of GLP-1. Furthermore, less than 1% of people with obesity globally are treated with branded anti-obesity medications. This, of course, means that there is a vast unmet need that is yet to be addressed.

However, we will widen the scope of our medicines, and we ensure greater relevance across varying BMI categories and patient preferences. Our portfolio reflects this diversity, targeted at offering both subcontinuous and oral delivery and addressing comorbidities associated with obesity.

Karsten Munk Knudsen CFO

In the first 6 months of 2025, our sales grew by 16% in Danish kroner and by 18% at constant exchange rates, driven by both operating units. The gross margin decreased to 83.4% compared to 84.9% in 2024.

The decrease mainly reflects amortizations and depreciations related to Catalent as well as costs related to ongoing capacity expansions. This is partially countered by a positive product mix, driven by increased sales of GLP-1-based treatments.

Sales and distribution costs increased by 15% in both Danish kroner and at constant exchange rates. The increase in cost is driven by both U.S. operations and international operations.

In U.S. operations, the cost increase is mainly driven by promotional activities related to Wegovy and Ozempic, while in international operations, the increase is primarily related to Wegovy launch and promotional activities.

Free cash flow in the first 6 months of 2025 was DKK 33.6 billion compared to DKK 41.3 billion in the first 6 months of 2024. The reduction in free cash flow is driven by increased capital expenditures partially countered by higher net cash generated from operating units.

The updated financial outlook for 2025 was announced last week, where the key highlights and drivers were described in the company announcement and investor call. Sales growth is now expected to be 8% to 14% at constant exchange rates and operating profit growth is now expected to be 10% to 16% at constant exchange rates. Sales and operating profit growth reported in Danish kroner is now expected to be 3 and 5 percentage points lower than at constant exchange rates, respectively, based on exchange rates from 31st of July 2025.

The lower sales outlook for 2025 is driven by lower growth expectations for the second half of 2025. This is related to lower growth expectations for Wegovy in the U.S., obesity market for Ozempic in the U.S., GLP-1 diabetes market as well as Wegovy in select IO markets.

Free cash flow is now expected to be DKK 35 billion to DKK 45 billion, reflecting the lower-than-expected sales growth, mainly driven by lower volume growth of GLP-1 treatment in the U.S.

Maziar Mike Doustdar

We'll be focused on raising the innovation bar within diabetes and obesity, bringing new and better medicines to patients with serious chronic diseases.

Looking ahead, we must act with greater urgency building on your company -- building on our company's strength while sharpening our focus on commercial execution and operational efficiency. By fostering innovation and making thoughtful investments, we will be having the greatest impact and we can ensure steady progress together.

Question-and-Answer Session

 

CVS takeup

We are pleased with what we're seeing so far on the CVS formulary conversion. That conversion is going according to plan at this point. We won't comment on the specific number of lives and what the actual percentage of conversion is. But to tell you that we are seeing things that are largely in line with what we expected and what was in the plans.

Compounding

This is something that, as you heard in our remarks, this is a priority for our company. This is a priority to protect patient safety. This is a priority to ensure that the laws are followed. And as we mentioned, as of May 22, compounding is illegal in the U.S. except for rare circumstances. And the APIs that are being imported into the U.S. are illegal and they are not coming from approved facilities.

Not to comment directly on any litigation, but I will let you know that there is nothing categorically that is off the table. You saw earlier this week that we gave some more insight in terms of the legal actions that we are taking. And certainly, our viewpoints on that are broad. And we have updated or increased our recent dialogue with FDA. And we will continue that ongoing dialogue, and we continue to think that there should be pressure that's put on these entities that are false advertising, misleading patients with a legal API.

China market

Let me start by saying what it's not the reason for lower growth. We are not losing market share in China. Actually, the opposite. We're gaining market share. We're basically, as you know, a bit left alone, competition is not yet present. So that is not the reason for the lower growth. As mentioned to us, the reason for the lower growth, I would say, is one-and-a-half things. The one thing is comparing it to last year, where we basically in anticipation of Wegovy launches, build some large stocks -- we now, of course, need to make that adjustments for this quarter. So it's a timely event and that's what the definitions behind the sentences.

The half issue is that, we need to accelerate the GLP-1 market growth, both, I would say, still in diabetes, but certainly also in obesity. We know that from our diabetes leadership and being in China for a long time, that you start somewhere in the center and you reach your customers, then you need to start going into the broader China in covering Tier 2 and Tier 3 and Tier 4. And then we need to do that both off-line as well as, of course, nowadays online. And that is, of course, what we are doing, and we're increasing investments and people behind our GLP-1 sales force, which gives me, of course, partially the confidence for the future.

I'm very confident for China's future. And the reason I am is because it has a huge amount of unmet need and populations that are within diabetes and obesity where we serve. 200 million people living with obesity, 100 million people living with diabetes is what I get my confidence from. And then we have some of the best people, the best team on the ground to maximize on that.

Future CEO strategy

I think, I've been put into this position, because I execute and I outcompete my competition. At least in IO, I have done that. And I plan now to do more of that for the rest of the company. So execution, execution, execution is what we said also last time. And then, when I think about the future and the huge opportunities that we have, we need to be able to finance that and not fall behind the competition.

To finance that, we need to reallocate, and relook at our cost base and really put the money where the growth is. So those are the three things I said last week, and they're still very valid today.

Loss of exclusivity impact

And of course, then there are few headwinds also LOE in a few select markets in IO. And to kind of size that in rough terms as we have also done historically on specific items of discretionary nature, then our assessment on LOE in the specific IO markets, in terms of impact to group growth next year is to the tune of low single digits of group sales. So that's what we're looking into next year, but clearly focused on driving growth with our portfolio and then continued Wegovy launches as well as oral sema in the U.S.

Price erosion Wegovy

And as we've said consistently, then do be careful in terms of working too much with the pricing on a quarterly basis. There are fluctuations there with the inventories at wholesalers, gross to net and the like. So what I would say is that, that directionally, when we talk about the Wegovy pricing, then the price erosion is more skewed towards the second half of the year linked to the fact that we're building the cash channel, and hence, there's a channel mix element to it.

And then, we're also investing in reducing friction in the access we have in place in the insured channel. So patients can get better access to reimburse the Wegovy in the U.S. marketplace. So more skewed to the second half in terms of price erosion. But of course, something we do in a very disciplined, thoughtful manner.

LLY trial results—LLY owns dulaglutide

Of course, we've only seen headline data. So it's difficult to go into details. Looking at the headline, however, it was clear that based on the primary analysis, tirzepatide which means basically it did not demonstrate a benefit versus dulaglutide. Dulaglutide that in the REWIND study demonstrated a 12% CV risk reduction versus placebo. This despite of a better weight loss and better glycemic control.

I'll remind you that semaglutide by comparison through SUSTAIN 6 has shown a 26% CV risk reduction, which is to date, unsurpassed in the incretin space. This does seem to confirm that semaglutide stands hard on the magnitude of CV benefit among the incretin-based drugs.

And a validation of what I think Martin was saying, all along, not all GLP-1s are the same.

Capex outlook

So I would say we are fairly close to the peak. And then as we conclude on the assets, then you will see a gradual decline. I won't guarantee from next year, but we're getting close to it at least. And then for the maintenance level of CapEx, then at least what we've seen historically, then the maintenance level has been around 5% to sales -- CapEx to sales. And now we're in the low double digits.

But of course, hopefully, CapEx will be higher in the case of growth outlook and pipeline coming to fruition. But I would say on our peptide fill/finish platform with what we have going now, we will be able to cater to many millions of patients in the coming decades. So we have a solid installed footprint in place there.

Oral launch

We are anticipating the approval towards the end of 2025. We are excited about this potential approval and launch. I won't comment on exact timing of launch, but certainly expect that we will launch the product as close to approval as possible, and having the organization ready to do that.

No specific comments on pricing strategy. However, since you mentioned it, having a cash channel option exists, and that's different in the way that we thought about launching products previously. Launching NovoCare Pharmacy is a very long-term view from our perspective. And we think obesity products, certainly lend themselves to the cash channel. So it's an option that we have, and we certainly look forward to making sure that we can meet patients wherever they are in terms of their access needs, whether that's through insurance or other forms that we can make available to them.

Guidance

So our guidance, we didn't build it for the low end. So clearly, we are closer to the center in terms of our base case, which is based on the trends we are seeing in terms of script numbers as well as the run rate in IO markets and launches there. And now you have the product and geography split to beyond what you had last week. So that's our base case.

And then, the reason why we have the guidance range and the low range is basically to cater for unforeseen events beyond what the trends we're seeing right now. And these events could be, for instance, gross to net adjustments in the U.S., given that we have a rebate provision of more than DKK 100 billion if you look in our reporting this quarter. So just the forecast uncertainty on that number positive or negative, could move the numbers up or down in the range.

And then, as we've seen, the obesity market is somewhat volatile. So we can have a scenario where trends are stronger and we can have a scenario where trends are softer, and that's basically what the way we constructed our guidance range.