Novo Nordisk Adjusts Forecasts Amid Challenges from Compounded GLP-1s

Novo Nordisk, the Danish pharmaceutical giant behind popular weight loss and diabetes drugs Ozempic and Wegovy, has revised its financial outlook for 2025 due to the impact of compounded versions of its GLP-1 medications on sales. Despite year-over-year growth in revenue and profit during the first quarter, the company faces headwinds from unexpected market dynamics and increasing competition.

Q1 Performance and Forecast Revisions

Novo Nordisk reported a 19% increase in net sales and a 22% rise in operating profit compared to the same period last year. However, the company has scaled back its 2025 financial forecasts, reducing sales growth guidance by three percentage points and operating profit guidance by five percentage points.

Ozempic, Novo's diabetes treatment, generated nearly $5 billion in sales during the first quarter, while Wegovy, marketed for obesity, brought in approximately $2.6 billion. Despite these impressive figures, both drugs experienced slightly lower sales compared to the fourth quarter of the previous year.

Compounded GLP-1s and Regulatory Developments

The widespread availability of compounded GLP-1 drugs in the United States has significantly impacted Novo Nordisk's sales volume growth. These compounded versions, produced by telehealth companies exploiting regulatory rules on drug compounding, have posed a challenge to the branded treatments.

However, recent regulatory developments may alleviate some pressure on Novo Nordisk. The Food and Drug Administration has determined that both Novo Nordisk's and Eli Lilly's GLP-1 medicines are no longer in shortage, effectively closing the loophole that allowed mass production of off-brand counterparts. A grace period for certain compounding pharmacies ended in late April, with a May 22 deadline for others involved in bulk production.

Market Competition and Strategic Initiatives

While Novo Nordisk grapples with the impact of compounded drugs, it also faces increasing competition from Eli Lilly's rival obesity drug, Zepbound. U.S. prescription numbers indicate that Zepbound is outpacing Wegovy, highlighting the competitive landscape in the GLP-1 market.

In response to these challenges, Novo Nordisk has implemented strategic initiatives. The company recently secured a deal with CVS Health, granting Wegovy preferred access over Zepbound on the insurer's standard formulary. Additionally, Novo Nordisk is pursuing approval for a pill formulation of semaglutide for obesity treatment, which could potentially expand its market reach.

CEO Lars Fruergaard Jørgensen emphasized the company's focus on combating unlawful compounding and improving patient access to GLP-1 treatments. Despite the adjusted forecasts and market pressures, investor confidence remains strong, with Novo Nordisk shares trading up by 2% on U.S. markets following the announcement.