Novo Nordisk Shares Plunge Amidst CEO Change and Weight-Loss Drug Competition

Novo Nordisk experienced a significant drop in its stock value on Tuesday, exceeding 20%. This decline followed the announcement of a new CEO and a downward revision of the company's profit expectations. The primary factor cited for the lowered outlook was weaker sales of Wegovy, its widely used weight-loss medication, attributed to competition from alternative, compounded drugs.

The company's revised projections for 2025 indicate an anticipated sales growth of 8%-14%, a decrease from the earlier forecast of 13%-21%. Similarly, the expected operating profit growth was adjusted to 10%-16%, down from the previous estimate of 16%-24%. Novo Nordisk attributed these changes to the ongoing use of compounded GLP-1s, slower-than-expected market expansion, and increased competition. GLP-1 agonists, a class of drugs used to treat diabetes, have significantly impacted the weight-loss sector.

Alongside the financial adjustments, Novo Nordisk revealed the appointment of Maziar Mike Doustdar as its new president and CEO. Doustdar, who has been with the company for over three decades, will assume the leadership role on August 7th. He will succeed Lars Fruergaard Jorgensen, who announced his departure in May. The change in leadership occurred amidst a substantial decline in the company's share price, which has fallen by nearly 37% since the beginning of the year.

The company acknowledged that while global sales of Wegovy are still growing, sales in certain markets are expected to be affected by the rise of compounded versions of the drug. These compounded medications contain the same active ingredients as Wegovy and other popular brands, often serving as substitutes when the branded drugs are unavailable. Despite regulatory efforts, these compounded versions continue to gain market share, offering consumers a more affordable alternative to name-brand drugs.

Novo Nordisk has taken action to address the issue, including ending a partnership with an online drug retailer due to concerns about counterfeit versions of Wegovy. The company is also actively pursuing various strategies, including legal action, to protect patients from the risks associated with these knockoff drugs. Novo Nordisk expressed deep concern that without strong intervention from regulatory bodies and law enforcement, patients will continue to be exposed to the risks posed by these potentially unsafe alternatives.