Novo Nordisk, Europe's largest company, announced a significant increase in its fourth-quarter profit, driven by the success of its weight-loss drugs. The company's profit rose by an impressive 62%, amounting to 21.96 billion kroner ($3.19 billion), while sales experienced a notable 37% climb, reaching 65.86 billion kroner. These figures exceeded the company's compiled consensus by 5% for operating profit and 4% for sales.
Rise in Novo Nordisk Shares
Following the positive news, Novo Nordisk's shares rose by 2% in early Copenhagen trade. Over the past 52 weeks, the stock has soared by an impressive 62%.
Driving Factors: The GLP-1 Class of Drugs
Novo Nordisk attributes its growth to the increasing popularity of the GLP-1 class of drugs. Sales of its obesity care products more than doubled, showing a remarkable rise of 105%. This was primarily due to the success of its diabetes care drugs, which can also be used for weight loss and witnessed a substantial 33% increase.
Ozempic, a type 2 diabetes treatment, achieved sales of 30.07 billion kroner in the fourth quarter. Additionally, Wegovy, prescribed for weight loss and weight management, recorded sales of 9.61 billion kroner.
Dominance in the GLP-1 Market Forecasted
Novo Nordisk is predicted to dominate the GLP-1 market alongside Eli Lilly. This market is expected to grow to a value of $100 billion annually for decades to come. According to Citi analysts, Novo Nordisk alone may reach peak sales of $77 billion from this class of drugs.
Supply Concerns Continue
Despite its success, Novo Nordisk's main challenge remains supply. In January, the company announced its gradual increase in the supply of lower-dose strengths of Wegovy in the U.S. Additionally, it plans to roll out Wegovy internationally with capped volumes.
Positive Outlook for Sales Growth
Novo Nordisk projects sales growth between 18% and 26% at constant exchange rates for 2024. Furthermore, the company expects operating profit growth between 21% and 29% at constant exchange rates. However, currency translation is anticipated to have a slight negative impact, reducing sales by 1 percentage point and profit growth by 2%. Analysts at JPMorgan believe that these projections suggest that Wall Street's earnings estimates for this year may need to increase by up to 4%.
New Stock Buyback Plan and Dividend Proposal
As part of its strategic moves, Novo Nordisk has initiated a new stock buyback plan of up to 20 billion kroner. Additionally, the company has proposed a final dividend of 6.40 kroner per share.
