Demand for weight-loss drugs surged throughout 2024, outpacing supply for most of the year. In December, Novo Holdings, an investment foundation of Novo Nordisk, acquired three manufacturing sites in Catalent to expand its production capacity.
Europe’s largest pharmaceutical firm, Novo Nordisk, reported fourth-quarter earnings that surpassed analysts’ expectations. The company’s shares jumped more than 6% at the market open in Europe following the results. Its stock remains flat in year-to-date performance.
However, the company expects slower growth in 2025, likely due to increasing competition in the weight-loss market, particularly from its US rival, Eli Lilly.
Profit Beats Expectations in the Fourth Quarter
Novo Nordisk’s operating profit rose 37% to 36.7 billion Danish kroner (€4.92 billion), compared to the estimated 33.6bn DKK (€4.5bn). Full-year operating profit increased by 25% (26% in constant currency) in 2024 to 128.3bn DKK (€17.2bn), with sales in diabetes and obesity care rising by 26%, mainly driven by GLP-1 diabetes sales growth of 21%.
The firm’s most popular weight-loss drug, Wegovy, posted a 107% year-on-year growth in sales to 19.87bn Danish kroner (€2.66bn) in the fourth quarter, although slightly missing expectations.
However, the annual growth rate slowed from 35.6% in 2023 and 27.6% in 2022. Its net profit margin also declined to 34.8% in 2024 from 36% in the previous year.
Investors are focused on the company’s next-generation weight-loss drugs, as the patent for its blockbuster drug Wegovy is set to expire in the early 2030s. Recently, Novo Nordisk revealed trial results for two new obesity drugs, CagriSema and Amycretin.
The former disappointed investors with less-than-projected weight loss, resulting in a 20% intraday plunge in its share price. However, the latter provided positive results, reassuring investors about its growth prospects.
Demand for weight-loss drugs surged throughout 2024, outpacing supply for most of the year. In December, Novo Holdings, an investment foundation of Novo Nordisk, acquired three manufacturing sites in Catalent to expand its production capacity.
CEO Lars Fruergaard Jørgensen commented: “We are pleased with the performance in 2024, where 26% sales growth reflects that more than 45 million people are now benefiting from our treatments. Further, we completed the acquisition of the three Catalent sites, and during the year, we progressed our R&D pipeline, including obesity projects such as CagriSema and Amycretin. In 2025, we will continue our focus on commercial execution, on the progression of our early and late-stage R&D pipeline, and on the expansion of our production capacity.”
A Softened 2025 Outlook
Novo Nordisk expects a slower growth of between 16% and 24% at constant currency in 2025, with the mid-point marking the lowest in three years. The softened outlook suggests that the weight-loss drug market may face a slowdown while competition intensifies globally.
Eli Lilly’s corresponding weight-loss drugs to Novo Nordisk’s obesity drug Wegovy and diabetes treatment Ozempic are Zepbound and Mounjaro, positioning the firm as a major rival to the Danish pharmaceutical giant. Eli Lilly recently released the latest trial results for its next-generation drug, retatrutide, showing an average weight reduction of 24.4% over 48 weeks, compared to 22% weight loss over 36 weeks for Novo Nordisk’s Amycretin.
Additionally, Novo Nordisk’s mounting spending on research and development may also squeeze its profit margin. The company’s R&D costs, primarily comprising employee costs and clinical trial expenses, accelerated in 2024, rising by 48% annually compared to a 35% increase in 2023.
