TradingKey - One of the biggest trends in the healthcare space over the past few years has been the rise of so-called GLP-1 drugs.
These can help treat type 2 diabetes and obesity but one of the other astounding effects is that they help people lose weight as it slows down how quickly a person’s stomach empties – making them feel full for longer and, thus, ensuring they eat less.
Understandably, the purveyors of these drugs have been immensely profitable. One of the biggest producers of these GLP-1 drugs is Danish firm Novo Nordisk A/S (NYSE: NVO). The company is set to report its Q4 2024 earnings on Wednesday 5 February before the market opens in the US.
Here’s what investors should know going into the earnings release and what they should be looking out for.
Watching Wegovy and Ozempic growth
Both Wegovy and Ozempic are the key GLP-1 drugs for Novo Nordisk and investors will be eager to see how much progress the company has had in broadening the reach of these two weight loss drugs.
While Wegovy is the key weight-loss drug for Novo Nordisk, Ozempic is also a key contributor but is more targeted at treating type 2 Diabetes.
In terms of its latest results, for Q3 2024, Novo Nordisk delivered revenue of DKK 71.3 billion (US$10.3 billion) for the period. That was up 21% year-on-year as sales of Wegovy drove broader growth, with the key GLP-1 drug posting sales that were up 79% year-on-year – at DKK 17.3 billion.
Meanwhile, Novo Nordisk’s Q3 2024 net profit hit DKK 27.3 billion and operating profit surged by 26% year-on-year to DKK 33.8 billion.
Increasing supply – watch out for surprises
The insatiable demand for GLP-1 drugs has Novo Nordisk scrambling to increase production of its blockbuster drugs and the company has already established a clear lead in the market in terms of the share it owns.
Global number of patients on GLP-1s across diabetes and obesity
Source: Novo Nordisk 9M 2024 earnings presentation
With a commanding volume market share of nearly two-thirds as of August 2024, Novo Nordisk added in its Q3 2024 earnings call that it’s looking to invest in capacity both internally and externally to increase supply – of Wegovy and Ozempic – in the short term and long term.
If Novo Nordisk can post stronger-than-expected Wegovy and Ozempic sales for the final quarter of 2024 then the stock could see a positive reaction. Indeed, on the back of the company’s release of its Q3 2024 earnings, shares jumped nearly 8%.
Despite Novo Nordisk narrowing its full-year 2024 sales growth outlook during that call, to 23% to 27%, investors can be hopeful that the company will be able to beat those numbers given the overwhelming demand for its drugs.
Indeed, it most likely comes down to the extent that the company was able to increase supply during the final quarter of 2024.
Is competition increasing?
Investors will also be keen to see how GLP-1 drugs from Eli Lilly & Co (NYSE: LLY) as the key peer reports just a day after Novo Nordisk, on Thursday 6 February.
Novo Nordisk’s dominant position in the US, though, looks set to continue as the company’s first nine months of 2024 saw its sales in North America increase by 31% year-on-year, largely driven by its GLP-1 drugs.
Despite the firm’s strong market position, its New York-listed ADRs are down over 22% in the past year amid worries over competitive pressures from Eli Lilly and a lack of supply for its key drugs.
Whether the upcoming results, and management’s comments, can help convince investors to get more bullish on the stock remains to be seen.
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