Novo Nordisk is set to release its second quarter financial results on Thursday. Analysts are expecting strong growth in net profit and sales. Here’s what to watch for:
Net Profit Forecast
According to a FactSet poll of analysts, net profit for the quarter is projected to increase by 55% to 20.63 billion Danish kroner ($3.03 billion).
Sales Forecast
The same FactSet poll forecasts second-quarter sales to rise to DKK55.47 billion, compared to DKK41.27 billion in the previous year.
These findings indicate significant growth for Novo Nordisk, cementing its position as a leader in the pharmaceutical industry. Stay tuned for the official announcement, which will provide further insights into the company’s performance.
GLP-1 Drugs: Continued Strong Growth Expected
Sydbank senior analyst, Soren Lontoft Hansen, predicts that Novo Nordisk’s glucagon-like peptide-1 (GLP-1) drugs for treating type 2 diabetes and obesity will continue to experience robust growth in the quarter. He estimates an impressive overall sales growth of 43% compared to last year, amounting to DKK27.45 billion for GLP-1 diabetes treatments. However, Hansen acknowledges that temporary production challenges in several markets due to high demand may slightly dampen this growth.
Growing Demand for Ozempic
Another noteworthy development is the increasing use of Novo Nordisk’s Ozempic diabetes drug for off-label obesity treatment. Sydbank expects a year-on-year sales growth of 44% for Ozempic. Prescription data from the U.S. reinforces the persistently high demand for the obesity drug Wegovy, which shares the same active ingredient, semaglutide, as Ozempic. However, Novo Nordisk’s decision to reduce the supply of low doses in the U.S. will impact quarterly growth.
Positive Outcomes: Weight Loss and Reduced Risk
In a recent trial, Wegovy has demonstrated not only its effectiveness in promoting weight loss but also its ability to reduce the risk of heart attacks, strokes, and cardiovascular deaths by 20%. This finding adds further value to the drug’s profile.
Overall, Novo Nordisk’s GLP-1 drugs continue to thrive, driven by increasing sales of Ozempic and strong demand for Wegovy. While temporary production challenges and reduced supply may pose some obstacles, the positive outcomes in terms of weight loss and risk reduction position these drugs as valuable therapeutic options for patients with type 2 diabetes and obesity.
Sales Forecast:
- GLP-1 diabetes treatments: DKK27.45 billion (43% YoY growth)
- Ozempic: 44% YoY growth
- Wegovy: DKK5.56 billion
It is evident that Novo Nordisk remains at the forefront of developing effective treatments for diabetes and obesity, leveraging semaglutide as a powerful active ingredient.
Sydbank Expects Gross Margin Improvement
Sydbank anticipates a boost in its gross margin due to the significant increase in sales and the effects of product-mix. However, lower net prices in the U.S. and currency effects may act as deterrents. The bank projects a gross margin of 84.0%, slightly lower than last year’s 85.3%. Despite the rise in costs for research and development, as well as sales and distribution, the bank believes that the increase in capacity costs will be outweighed by the growth in revenue.
Positive Outlook for 2023
For the year 2023, Sydbank predicts a sales growth rate of 24% to 30% compared to the previous year, along with an operating profit growth rate of 28% to 34%, both in constant currencies. However, when considering reported figures, sales growth is expected to be around six percentage points lower than constant currencies, and reported operating profit growth around nine percentage points lower.
Potential Production Challenges
Sydbank highlights potential production challenges faced by Novo Nordisk related to their GLP-1 portfolio within diabetes and obesity treatment. These challenges might hinder any upward adjustment to the company’s guidance. Hence, Novo Nordisk’s production capacity will be closely monitored during the accounting period.
