Novo is quite the burden to carry. The report was absolutely terrible, even though this year’s guidance was raised. However, investors are looking ahead to 2031-2032, when the semaglutide patents expire. Right now, it looks really bad.
Ziltivekimab was the investors’ greatest hope for filling that gap. It would have reached 3–5 billion in sales just in time for 2032-2035—Novo’s most important asset independent of semaglutide. Well, the ZEUS study completely failed, and the stock price drop last week reflected that. The result wasn’t even due to the study design (i.e., fixable), but rather the entire hypothesis failed. There are still the ATREMIS and HERMES studies coming up for ziltivekimab (H1 2027), but it would take a miracle to hear anything positive from them. This asset likely went 100% into the trash.
Then there is CagriSema. Once again, Novo shot itself in the foot by showing that its own drug is worse than the competitor’s. That is, CagriSema turned out to be comparable to Lilly’s tirzepatide in weight loss, but worse in blood sugar control. Lilly says thank you while Novo pays for these studies out of its own pocket. The revenue targets for CagriSema can be cut again.
Speaking of semaglutide, the report mentioned for the first time that generic drug manufacturers have gone on the warpath. Cipla is trying to get a generic drug to market in the US through legal means, and Sandoz is trying to invalidate Novo’s semaglutide patent in Europe. The war over patents and marketing authorizations has begun, and legal costs will rise.
Oral Wegovy was hyped in the call; sales grew 28% in three months, and the underlying demand grew even faster. This in itself is excellent. But it looks like oral Wegovy sales are cannibalizing the sales of injectable Wegovy. A quick calculation shows that Novo seems to get about 170 USD in revenue per prescription from oral Wegovy, while 370 USD comes from injectable Wegovy. So, it’s not a very good trade for Novo to replace injectables with oral versions. Injectable sales fell 22% in the US this quarter. Management insists that cannibalization isn’t happening, but independent sources seem to indicate otherwise. It’s impossible to calculate from publicly available data, so the investor has to choose who to believe.
Combined, Wegovy sales (oral + injectable) grew by 4% yoy in the US. In the same period, Lilly’s Mounjaro sales grew by almost 50%! Have they lost market share?
And if that wasn’t enough, the report also stated that Novo has agreed with US authorities to lower the prices of Wegovy and Ozempic by 35–50% starting in 2027. This, too, was apparently mentioned for the first time now. The comment in the report was: “This is expected to impact Novo Nordisk’s cash flow in 2027.” No shit.
On a positive note, let’s highlight the start of the Zenagamtide study. This partly helps fill the ziltivekimab gap. An ambitious study that, if successful, could bring some relief, albeit later than ziltivekimab would have.
The semaglutide patent cliff is indeed coming in 2031-2032, and Novo doesn’t really have any assets independent of semaglutide to cover it. Even CagriSema’s price will drop once pricing is dictated against generic semaglutide after the patent expires. This gap won’t be filled from within the house, and eyes are now turning to what assets Novo can acquire from the outside. There is still room on the balance sheet, and the remaining few years of Wegovy cash flow must be used wisely. We shall see.