I’m genuinely surprised by the market’s reaction to Novo Nordisk’s Q2 results. A ~6% sell-off after these numbers feels excessive to me.
I’ve gone through both the earnings report, trying to understand whether I was missing something, but I still struggle to find a reason that justifies such a sharp correction.
There are certainly some negatives.
The biggest one is the ongoing pricing pressure in the U.S. The report repeatedly mentions lower realized prices, so although volumes continue to grow, average selling prices remain under pressure. I completely understand why the market is focused on this.
Gross margin also declined from 82.7% to 78.2%, but management explained that roughly DKK 3 billion of the impact came from one-off manufacturing expansion costs and restructuring expenses. To me, that looks more like a temporary investment than a structural deterioration.
Then there’s the disappointment around the ZEUS trial, which removes one potential long-term growth avenue in cardiovascular disease.
However, beyond those points, I actually thought the report was very strong.
- Adjusted operating profit (EBIT) increased 11%, comfortably beating consensus.
- Management raised full-year sales and operating profit guidance.
- Cash generation remains outstanding.
- The balance sheet continues to be exceptionally strong.
- The obesity business is still delivering double-digit growth.
- International sales continue to expand at an impressive pace.
What caught my attention the most was the Wegovy Pill.
According to the company, it has already surpassed 5 million prescriptions since launch and is now running at approximately 265,000 weekly prescriptions, making it the most successful launch of an oral GLP-1 therapy to date.
Management also highlighted that Novo continues to lead in attracting new patients despite intense competition from Eli Lilly. That suggests they’re still gaining market share rather than simply defending their existing position.
Finally, I found the tone of management during the conference call remarkably confident. There was no noticeable change in their long-term narrative or signs that the business is deteriorating. If anything, they sounded optimistic about the years ahead.
So I’m curious to hear other opinions.
Is the market simply repricing the stock because of pricing pressure and margin compression, or is there something important in the report or conference call that I’ve overlooked?
