“Miracle Weight Loss Pill” Loses Magic! Wegovy Demand Drops, Novo Nordisk (NVO.US) Stock Price Plunges by Over $900 Billion
Zhitong Caiping APP has learned that after the unexpected decline in sales of weight loss drugs and the company's stock price plummeted by over $900 billion, Danish pharmaceutical giant Novo Nordisk A/S (Novo Nordisk) will appoint its international business head as its new CEO.
As this Danish pharmaceutical company faces fierce competition from its strongest competitor, US pharmaceutical giant Lilly (LLY.US), with more than three decades of experience in company operations, internal veteran Maziar Mike Doustdar will take on the heavy responsibility of reversing the decline in market share for weight loss drugs.
Novo Nordisk's latest announcement shows that its flagship weight loss drug Wegovy, once dubbed the "miracle weight loss pill," has seen a significant slowdown in sales growth and is now expected to grow at a slower pace than previously anticipated, leading to an unexpected sharp reduction in profit expectations. This also means that the company's market share is being steadily eroded by Lilly's rival drug Zepbound.
Just before this latest personnel appointment announcement was released, Novo Nordisk unexpectedly lowered its financial forecasts on Tuesday, with sales expected to grow only 8% to 14%, and operating profit expected to grow 10% to 16%, compared to previous expectations of 21% and 24%, respectively.
As a result of the significant reduction in performance, Novo Nordisk's stock price plummeted by as much as 30% on the European Copenhagen Stock Exchange, with the company's total market value evaporating over $930 billion. On the US market, Novo Nordisk's stock price fell by as much as 28%. The company's stock price has been steadily declining since its historic high in 2024, primarily due to the increasing competition faced by weight loss drugs.
"We must admit that Wall Street analysts will start questioning the market's short-term and long-term expectations for weight loss drugs, which have been greatly exaggerated," said Jared Holz, a US healthcare strategist at Swiss Bank Securities.
As the world's first injectable weight loss drug provider, Wegovy's actual efficacy has shown no significant difference in numerous studies compared to Lilly's Zepbound and some potential products focusing on the "next-generation weight loss drugs." The magic of Wegovy for Novo Nordisk's performance is no longer present.
However, the company seems determined not to let its market share be eroded by competitors such as Lilly and companies focusing on next-generation weight loss drugs. It hopes that internal veteran Maziar Mike Doustdar will lead the weight loss drug business back to its peak.
In May this year, Novo Nordisk announced the removal of CEO Lars Frøligh Andersen after the company's weight loss drug business suffered consecutive setbacks, with a new growth curve sought. The company has also stated that a new contract with CVS Health Corp. will drive sales of its star weight loss drug product Wegovy starting from July 1.
Novo Nordisk's management team pointed out in its performance forecast that the latest downward revision reflects the increasingly intense competition faced by Wegovy and its sister drug Ozempic, which is used to treat diabetes. The company also noted that the US market still uses a cheaper version of Wegovy, as well as the Trump administration's tariff policies, which have put pressure on overall market demand growth.
Novo Nordisk said it will use legal means to crack down on illegal drug formulations and increase marketing investment in direct patient engagement. The company expects its second-quarter sales to grow by 18% at a fixed exchange rate and operating profit to grow by 40%. Novo Nordisk will release its full second-quarter financial report on August 6.