Novo Nordisk’s Q2 Doesn’t Change My View
Novo Nordisk: H1 results and updated valuation
Following Novo Nordisk’s profit warning last week, the company reported earnings today.
The stock is down another 5%. Novo Nordisk is now down 67% over just one year.
While the narrative hasn’t changed much since my post last week, I still think it’s important to discuss the earnings. I’ll try to keep it short, though.
Novo Nordisk First Half Results
Novo Nordisk reported first-half revenue of 155 billion DKK (~$24 billion), up 16%, or 18% constant exchange rates.
Q2 revenue reached 77 billion DKK, up 13% year-over-year. That’s a slowdown from the 20% YoY growth rate seen last quarter, and revenue also declined slightly on a sequential basis.
Operating profit outpaced revenue growth, up 25% (or 29% CER) to 72 billion DKK, lifting the margin from 43% to 47%. But that margin expansion is inflated by a 5.7 billion DKK R&D impairment, which lowered reported expenses.
Free cash flow dropped to 33.6 billion DKK, mainly due to higher capex, which rose to 28 billion DKK from 19 billion last year. Management expects capex-to-sales to stay in the low double digits in the coming years, suggesting Novo is far from done reinvesting for growth.
GLP-1 Diabetes and Obesity
In diabetes, GLP-1 sales grew 10% in International Operations (IO) and 9% in the U.S. The main driver here is still Ozempic.
In obesity, growth was much stronger:
+36% in the U.S.
+125% in IO
Wegovy alone grew 335% in IO
U.S. growth is lagging due to the compounding problem, which is negatively affecting Wegovy subscriptions.
Internationally, the contrast is stark: Novo now holds 71% market share in IO across its GLP-1 portfolio. Ozempic is available in 80 countries, and Wegovy in 35, with 15 of those launched just this year. More launches are coming in the second half of 2025.
Novo’s management emphasized the global scale of the opportunity: there are 900 million people with obesity globally, of which 90% are outside the U.S. Less than 1% are currently treated with branded anti-obesity medication.
In other words, this is still early days. And not just in the U.S.
The Compounding Problem
As expected, much of the earnings call was focused on the threat posed by illegal compounded semaglutide in the U.S.
Despite a ban on compounding since May, Novo estimated 1 million patients are still being treated with these off-label versions. Unsurprisingly, this is limiting Wegovy’s U.S. penetration.
Novo is suffering more than Eli Lilly, largely because Wegovy has stronger brand recognition. According to HSBC’s Rajesh Kumar, 75–80% of compounded pharmacies are targeting Wegovy, not Zepbound. When consumers search for weight loss drugs, they search for Wegovy, and compounders take full advantage.
So Novo’s brand strength is now working against it.
Novo’s stance on this is clear. David Moore, EVP of U.S. operations, stated:
“Compounding is illegal in the U.S., and the APIs being imported are illegal and they’re not coming from approved facilities… We have increased our recent dialogue with the FDA, and we’ll continue that ongoing dialogue. We continue to think that there should be pressure put on these entities that are falsely advertising, misleading patients with illegal APIs.”
Novo is obviously trying to shut this down. Over the long term, my guess is that it’s inevitable that these illegal practices will stop. Not a wild guess since it’s literally illegal, right?
Even so, paradoxically, compounding also reflects the issue of unmet demand. The core obstacle for most untreated patients is the price tag.
Last week, President Trump sent a letter to the 17 largest pharmaceutical firms, urging them to cut prices and sell drugs directly to U.S. patients.
Novo’s CFO, Karsten Munk Knudsen, said the company “shares the same objective” of lowering prices. And while it’s easy to dismiss that as an obligatory comment—it’s the President, after all—it’s also in Novo’s favor.
In my original thesis, I argued that lower prices are inevitable as this market grows.
Again, we’re talking about 900 million obese people globally. Fewer than 1% are treated with branded medication.
If just another 1% of those 900 million receive treatment, the market doubles. Imagine that number getting to 50%. We’re looking at one of the largest pharma markets in history.
Should You Buy Novo Nordisk Today?
Since last week, my valuation hasn’t changed. The only thing that’s changed is the price dropping another 11% from 325 DKK to 290 DKK.
I refer you to last week’s post if you’re interested in my thoughts on the current valuation.
That’s it for today; I promised to keep it short.
Thanks so much for reading.
Lucas
Author & Founder, Summit Stocks
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Thank you. Are you saying 71% market share is based on ~ 9 million customers (the ~ 1%)? Did I get your math correct? Is that from NVO docs?
"we’re talking about 900 million obese people globally. Fewer than 1% are treated with branded medication.
If just another 1% of those 900 million receive treatment, the market doubles. "