Ozempic drugmaker just became a victim of its own success

It seems counterintuitive, if not implausible, that a company which has revolutionised Western health and promises to potentially eradicate the insidious plague of obesity and address diabetes can be failing to meet its profit and sales expectations.

But that is the dilemma faced by Ozempic and Wegovy maker Novo Nordisk. Its share price is shedding value faster than patients are shedding kilos.

Weight-loss jabs such as Ozempic have soared in popularity.Credit: AP

For blame, one need look no further than pirates and the president (Trump, of course).

Novo Nordisk stunned investors on Wednesday by downgrading its earnings expectations, losing nearly a third of its share price at one point during the day’s trading – that’s $143 billion in value that evaporated in a couple of hours.

For some context: there are plenty of spectacular drugs and treatments that have been developed over recent decades to address many of the world’s serious health issues, from cancer to heart disease, but this drug tackles obesity and therefore the myriad other health conditions that stem from being overweight (such as stroke, osteoarthritis, heart disease and even some cancers).

As such, it is a game-changer.

These semaglutide drugs became so popular after their efficacy for weight loss became apparent that in a sense they became victims of their own success.

According to the World Health Organisation, about one billion people around the globe are obese, which means the addressable market for this drug is beyond huge and skewed to Western (and therefore wealthier) economies.

And that market is still growing. The number of people afflicted by obesity has doubled over the past 30 years in adults, and quadrupled in children and adolescents, the WHO says.

But only a few million are receiving treatment, according to Novo Nordisk.

So what went wrong?

These semaglutide drugs became so popular after their efficacy for weight loss became apparent that, in a sense, they became victims of their own success.

In many markets, including the US and Australia, the two manufacturers, Novo Nordisk and the US pharmaceutical Eli Lilly, couldn’t keep up with demand.

The demand then spurred the creation of copycat drugs – or compounders – which were allowed a sales window by authorities.

And while the window that enabled knockoffs to fill supply has now closed in the US, the black market, once established, isn’t easy to eradicate.

In a notification to investors, Novo Nordisk said: “For Wegovy in the US, the sales outlook reflects the persistent use of compounded GLP-1s, slower-than-expected market expansion and competition.”

“Despite the expiry of the FDA (Food and Drug Administration) grace period for mass compounding on May 22, 2025, Novo Nordisk market research shows that unsafe and unlawful mass compounding has continued, and that multiple entities continue to market and sell compounded GLP-1s under the false guise of ‘personalisation’.”

It then had to confess that full-year sales growth is expected to come in between 8 per cent and 14 per cent, well down on previous guidance of between 13 per cent and 21 per cent.

But finding a commercial remedy for Novo Nordisk isn’t simple and will require what it calls, aggressive intervention by federal and state regulators and law enforcement.

Meanwhile, US President Donald Trump’s trade turmoil has injected plenty of uncertainty into international pharmaceutical producers, with companies receiving limited visibility on what duties might be imposed on goods being sold into the US.

Until Sunday, European pharmaceutical companies were being threatened with a 200 per cent tariff on sales into the US.

The deal with Europe announced this week may mean the duty could come in at 15 per cent.

Pharmaceutical products had previously been exempt from duties, but the industry was bracing for targeted duties due to US government investigations.

But even a 15 per cent tariff will raise the cost of the drugs and place further strain on sales and negatively affect supply chains.

It will also put Novo Nordisk at a disadvantage relative to its main legitimate rival, the US pharmaceutical group, Eli Lilly, which produces Semaglutide products under the Mounjaro and Zepbound brands.

It is a lesson in how a company that has disrupted the health industry can also be disrupted.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.