Today's Edition
LONDON (REUTERS)
A US ban on copycat versions of Novo Nordisk's Wegovy has begun to lift use of the weight loss drug, but the company will need to show more robust growth in the months ahead to bolster market confidence, investors and analysts say.
New Wegovy prescriptions have increased by about 33% since May 22, when a US Food and Drug Administration ban on so-called compounded versions of Wegovy took effect, amounting to 181,200 in the week ended July 18, according to data from IQVIA that was shared with Reuters by industry analysts.
Total Wegovy prescriptions have also increased, narrowing the lead for Eli Lilly and Co's Zepbound. In the week ended May 23, U.S. Zepbound prescriptions exceeded Wegovy by nearly 175,000. By July 18, the gap was about 133,000.
Early signs of a shift come at a critical juncture for Novo. After Wegovy's initial stunning success, investor confidence was rattled when Zepbound and compounders started to slow the drug's growth.
And then in May, the Danish company cut its full-year sales and earnings forecasts and announced the surprise exit of Chief Executive Lars Fruergaard Jorgensen, citing market challenges and a stock price nearly 60% below its 2024 peak.
Jorgensen said at the time he expected the FDA compounding ban to lift sales in the second half of this year. Investors are keen to hear whether that is still likely when the company reports quarterly earnings on August 6.
That leaves the drugmaker in what Barclays analyst Emily Field called a "show me" phase - no longer buoyed by optimism about a turnaround but under pressure to deliver.
Booming sales of Wegovy catapulted Novo to become Europe's most valuable listed company, peaking in June 2024 at about 615 billion euros, after the weekly injection became the first highly-effective obesity treatment approved in the US in 2021.
But supply disruptions and gaps in health insurance coverage for Wegovy helped fuel the market for cheaper compounded - or copycat - versions, which are allowed under US law when drugs are in shortage.
Investor sentiment on Novo soured after the company lost ground to US rival Eli Lilly, which launched Zepbound in late 2023.
In its first full-year forecast downgrade since Wegovy's launch, Novo said in May it expected local-currency sales growth of 13-21%, down from a previous forecast of 16-24%. Operating profit growth is projected at 16-24%, versus 19-27% previously.
Capturing more of the patients who had turned to compounded drugs is key to meeting those targets.
The FDA determined that Wegovy was no longer in shortage in February, leading to the ban on compounded versions. Novo has rolled out new tactics to bring patients back, including a limited-time discount for one month's supply, and secured better coverage from insurer CVS Health.
