Sales of weight-loss pills exceeded forecasts by 20%. Will Novo reclaim the lead from Lilly?

Danish pharmaceutical giant Novo Nordisk reported quarterly earnings that exceeded analysts’ expectations: sales of Wegovy tablets, used to treat obesity, surpassed forecasts amid continued global growth in the use of GLP-1 drugs. Following the release of the results, Novo shares jumped 4% in Copenhagen trading, while the company’s American Depositary Receipts rose 5.6% in pre-market trading in New York.

Novo Nordisk’s adjusted operating profit in the third quarter rose 34% year-over-year to 31.7 billion kroner (4.8 billion), exceeding FactSet analysts’ expectations by nearly 11%, according to CNBC. Revenue increased by 4% to 79.2 billion Danish kroner (11.9 billion)—7.6% higher than forecasts.

The strong performance was largely driven by the tablet version of the best-selling Wegovy injections, which is now available in eight markets, including the U.S., Germany, the U.K., and the UAE. This drug is considered one of Novo’s key growth drivers, as it can attract a new audience—people who want to lose weight but are not willing to get injections, notes Barron’s. Sales of Wegovy tablets totaled 5.4 billion kroner ($810 million), compared with market estimates of 4.55 billion.

As a result, the company has updated its full-year guidance: adjusted revenue and operating profit are now projected to range from minus 2% to plus 2% at constant exchange rates. Novo’s previous forecast had called for a decline of up to 6% or for figures to remain at last year’s level.

Novo is competing with the U.S.-based Eli Lilly in the rapidly growing market for weight-loss drugs, Bloomberg notes. Although the Danish company was a pioneer in the GLP-1 category, it has gradually ceded its leadership to its rival in the key U.S. market. Last week, Lilly also raised its annual forecast thanks to strong demand for its injectable drugs—the diabetes medication Mounjaro and the weight-loss drug Zepbound.

However, in the tablet segment, Novo has pulled ahead this year: the oral version of Wegovy is currently outperforming Lilly’s equivalent in terms of patient acquisition, according to Bloomberg. Novo CEO Mike Doustdar noted a “clear turning point in patient enrollment” in the third quarter following the announcement.

At the same time, the head of the pharmaceutical company emphasized that the business’s recovery is only just gaining momentum and cautioned against jumping to conclusions. “A turnaround and recovery aren’t determined by a single data point or a single successful quarter,” he said. “But the consistent improvement in forecasts gives us confidence that we are moving in the right direction.”

Investors are currently focused on next-generation developments and their ability to treat obesity-related conditions—such as heart and kidney disease, sleep apnea, and arthritis—according to CNBC. In particular, Novo’s medium-term growth prospects depend largely on the injectable drug CagriSema, whose clinical trials have so far shown less weight loss than the market had expected, the network notes.

Amid investor concerns about declining sales of GLP-1 drugs and competition from Eli Lilly, Novo’s shares, which are listed in Copenhagen, have fallen by about 17% since the beginning of the year. Lilly’s shares in New York, meanwhile, have risen 31% over the same period.

The most common analyst recommendation for Novo Nordisk stock is “hold”: the stock has 15 “Hold” ratings, according to MarketScreener. In addition, the stock has five “Buy” recommendations and six “Sell” and “Underperform” recommendations.

When it comes to Eli Lilly’s stock, however, analysts are more optimistic: the overwhelming majority recommend buying it—the company has 28 “Buy” and “Overweight” ratings, according to MarketWatch data. Only three analysts advise holding the stock (Hold), while just two recommend selling it (Sell and Underweight).

This article was AI-translated and verified by a human editor