"Miracle weight loss drug" in high demand! Novo Nordisk Q3 revenue and profit reach new highs | Earnings Report

Hot newcomer in the European stock market, Novo Nordisk, achieved another record high in its third-quarter performance with the help of weight-loss drugs. It outperformed in the gloomy overseas economy.

On Thursday, November 2nd, before the European stock market opened, Novo Nordisk released its quarterly performance for the period ending on September 30th.

According to the earnings report, in the third quarter, Novo Nordisk recorded revenue of DKK 587.3 billion ($83.4 billion), surpassing market expectations of DKK 578 billion. This represents a year-on-year growth of 29%, or 38% when calculated at a fixed exchange rate (CER).

Among them, the sales of the weight-loss drug Wegovy reached DKK 9.65 billion ($1.36 billion), exceeding market expectations of DKK 8.07 billion. This represents a quarter-on-quarter growth of 28% and an eight-fold increase compared to the same period last year.

Novo Nordisk also achieved a historic high in operating profit (EBIT) for the third quarter, reaching DKK 269.1 billion, surpassing the expected DKK 254.2 billion. This represents a year-on-year growth of 33%, or 47% when calculated at a CER.

Net profit for the third quarter reached DKK 224.8 billion, also surpassing the expected DKK 214.9 billion. This represents a year-on-year growth of 56%.

Sales of GLP-1 drugs in China increased by 80% YoY

It is worth mentioning that according to Novo Nordisk's disclosure, sales of GLP-1 drugs in China increased by 80% when calculated in Danish kroner, and by 95% when calculated at a fixed exchange rate (CER). The sales growth is mainly attributed to the weight-loss function of the diabetes drug Ozempic. The market share of GLP-1 in total diabetes prescriptions increased from 2.0% twelve months ago to 3.3%. In the entire Chinese market, Novo Nordisk's market share reached as high as 74.6%.

Sales in regions other than the United States, China, Europe, Africa, and the Middle East increased by 54% when calculated in Danish kroner, and by 61% when calculated at a CER. The sales growth reflects the increase in sales of Ozempic and the oral anti-diabetic drug Rybelsus, partially offset by Victoza.

The estimated market share of GLP-1 in total diabetes prescriptions increased from 1.7% twelve months ago to 2.2%. Novo Nordisk remains the market leader with a market share value of 82.1%. Strong demand for weight loss drugs, the company has raised performance guidance three times this year

On October 13th, Novo Nordisk raised its full-year revenue and operating profit guidance for the third time this year to reflect strong demand for Wegovy and Ozempic in the US market.

Currently, the company expects revenue and operating profit, calculated at CER, to grow by 32%-38% and 40%-46% respectively.

In the first nine months of this year, the company's revenue reached DKK 1.66 trillion, a 39% increase compared to the same period last year.

Lars Fruergaard Jørgensen, President and CEO of Novo Nordisk, stated in the earnings report:

"We are very pleased with the sales growth in the first nine months of 2023, which reflects that more people than ever are benefiting from our innovative treatments for diabetes and obesity."

Insufficient supply of weight loss drugs, competitors' similar products may be approved in the US soon

However, despite record sales and operating profit for the quarter, the supply of the popular weight loss drug Wegovy is still limited.

Due to the limited supply of Wegovy, obese patients have been turning to Novo Nordisk's Ozempic, a diabetes drug, as an alternative, as both drugs have the same active ingredient. This has also led to a shortage of Ozempic for patients using it to treat diabetes.

Due to the supply shortage, Novo Nordisk has had to implement various restrictions to prioritize the supply of drugs to diabetes patients. In August of this year, the company stated that these restrictions are likely to continue until 2024.

Novo Nordisk stated:

"While the supply capacity of Wegovy is gradually expanding, the supply of low-dose drugs in the United States will still be limited to ensure the continuity of medical services."

Supply shortage is the main factor limiting Novo Nordisk's performance. A 30% revenue growth is the limit of production capacity, not sales.

Investors and analysts are eagerly awaiting the company's solution. In the fourth quarter of this year, it is expected that Novo Nordisk's competitor, Eli Lilly, may receive approval for its GLP-1 weight loss drug, Mounjaro, in the US.

In addition, the company also stated in the earnings report that it has recently submitted applications to regulatory authorities in the US and the EU, requesting approval to use Wegovy to reduce the risk of cardiovascular disease.