Novo Nordisk is still hitting a glass ceiling in revenues due to GLP-1 supply constraints even as sales keep rising. The price of Wegovy dropped in the first quarter, a trend that the company expects to continue due to competition as well as its so-called “volume-based strategy.”
The drugmaker’s sales in the first three months of 2024 increased 24% in constant exchange rates from the same period last year to 65.3 billion Danish kroner ($9.4 billion). It also reported a 43% rise in Ozempic sales to 27.8 billion Danish kroner ($3.9 billion) and more-than-doubling of Wegovy sales for obesity to 9.4 billion Danish kroner ($1.4 billion). It’s raising both revenue and profit forecasts.
But Novo told the media Thursday morning that due to the unwavering demand for its GLP-1 drugs, shortages persist across territories including the US and China. Sales growth of its diabetes drug Ozempic, in particular, has been negatively impacted by supply issues, according to a first-quarter earnings report.
The continued supply/demand dynamics echo Eli Lilly’s comments on Tuesday that it is expecting supply bottlenecks for its GLP-1/GIP products until the end of the year.
‘Controlled launches’ and ‘gradual’ supply ramp
Novo said in January that it started to increase the supply of lower doses of Wegovy in the US, after facing supply constraints for months and scaling back its starter doses in May last year. “We’ve been in a position to increase the amount of product we released to the market. Firstly in late January and now again in April,” CEO Lars Fruergaard Jørgensen said. Overall supply will be gradually increased throughout 2024, he added.
Novo doesn’t see a lot of patients switching to competing drug products, Jørgensen said. “You see a very steep uptake when you have supply available,” he added.
Supply constraints have also been affecting the international launch of Wegovy. “We aim for having controlled launches where we ensure continuity of care,” Jørgensen said. “We will be launching in ways where we have capped volumes and we make sure that it’s distributed in a responsible way.”
The company touted its 45 billion Danish kroner ($6.5 billion) investments into manufacturing capacity, which will help ramp up production in existing sites and support facility acquisitions. Novo expects to close its purchase of three Catalent sites from Novo Holdings by the end of 2024. Novo Holdings refiled its announced purchase of Catalent to the Federal Trade Commission in early April.
Pricing and commercial dynamics
Novo expects Wegovy prices to continue going down in the US market over the next year but Jørgensen would not specify by how much. But he said the lower price should be “exceeded by the significant volume growth.”
Wegovy’s list price is currently around $1,350 per package for a month’s supply, according to Novo’s website. Pricing of Novo’s blockbuster drugs has received recent backlash, with Sen. Bernie Sanders (I-VT) launching an investigation into the drugmaker’s pricing strategy earlier this month.
In March, Wegovy won an FDA label expansion to reduce the risk of cardiovascular death, heart attack and stroke in heart disease patients who are either obese or overweight, a milestone that is set to open up Medicare Part D coverage for the drug in light of recent CMS guidance.
Karsten Munk Knudsen“We have been preparing our field force and preparing our commercial organization, and now we are out educating the market — both normal GPs but also cardiologists — about the benefits of Wegovy in terms of cardiovascular risk reduction,” CFO Karsten Munk Knudsen said.
The company also said “there is no expected impact for our marketed products” due to the Biosecure Act. The bill could stop certain Chinese companies “of concern” from working with US businesses. “We feel good about our ability to gradually scale [supply] capacity,” the CEO added. Other pharma companies gave a range of comments on the bill during this year’s first-quarter earnings season, from CRO partnerships changing “over time” to having “minor exposure” if passed.
Jørgensen also addressed Novo’s decision to discontinue diabetes drug Levemir effective last month. The long-acting insulin product was shelved amid significant price cuts and anticipated supply disruptions. “This is obviously a choice that is not an easy one to make,” the CEO said. But “with the more focused portfolio we have, we can both treat people in need of insulin, but also treat many more people by the capacity that is freed up” by the discontinuation, he added.