Novo Nordisk (NVO) stock took a hit in pre-market trading after the company reported a miss on both top and bottom lines of its second-quarter earnings. This news comes on the heels of a recent announcement by the company of a downward revision in its 2025 guidance.
While Novo Nordisk narrowly missed revenue expectations, reporting $11.95 billion compared to the anticipated $11.97 billion, it also fell short on earnings per share (EPS), coming in at $5.96 versus the estimated $6.06 per share. Despite this, the company saw a 16% increase in sales year over year, with its two blockbuster drugs, Ozempic and Wegovy, contributing $7.9 billion to the total revenue for the quarter.
The company’s growth has been dampened by the proliferation of compounded weight loss drugs that mimic its semaglutide ingredient. Novo Nordisk has taken legal action against these copycat versions, filing a total of 132 lawsuits in 40 states, with 14 new suits announced just last week.
Outgoing CEO Lars Jørgensen pointed to the impact of these unauthorized versions of their drugs on the company’s growth trajectory, noting that over one million patients are using these knockoff medications. He highlighted concerns about the quality control and lack of FDA approval for these products, which are primarily produced in China.
In addition to the competition from copycat drugs, Novo Nordisk faces challenges from rival pharmaceutical company Eli Lilly, whose new patient prescriptions have surpassed 60%. Despite securing a deal with CVS to be the exclusive weight loss drug on its formulary, Novo’s drugs, including Ozempic, will face pricing negotiations for Medicare next year.
Adding to the company’s woes, President Donald Trump recently sent a letter to Novo Nordisk and 16 other companies demanding that they provide their lowest prices offered to developing countries to the Medicaid population. Jørgensen defended the company’s pricing, stating that Medicaid enrollees already receive some of the lowest prices compared to Europe.
While Novo Nordisk has not responded directly to Trump’s demand for lower cash pricing for all patients, the company’s direct-to-consumer platform, NovoCare, has seen a 10% market penetration since its launch in March.
Despite these challenges, Novo Nordisk remains committed to navigating the complex landscape of the pharmaceutical industry. As the company continues to address competition, pricing pressures, and legal battles, investors will be closely watching to see how Novo Nordisk adapts and evolves in the ever-changing healthcare market.
