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Highlights:
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Jefferies downgrades Novo Nordisk to "underperform," citing concerns over the supply of its weight-loss drug, Wegovy, particularly in the United States.
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Recent data indicates a significant decline in Wegovy prescriptions, especially for the 0.25 mg starter dose, which dropped by 37% in late September.
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Supply constraints at Novo Nordisk coincide with competitor Eli Lilly resolving shortages of its weight-loss drugs, raising concerns about Novo's market position.
Jefferies has downgraded its rating on Novo Nordisk {NYSE:NVO} to "underperform" and reduced its price target to DKK 575 from the previous DKK 782.90. This decision arises from growing concerns regarding the supply chain of the Danish pharmaceutical giant's weight-loss drug, Wegovy, particularly in the U.S. market.
Recent trends show a notable decline in Wegovy prescriptions, with a 7% drop in the last week of September, which is more significant than the 3% decline observed in the broader market for glucagon-like peptide-1 (GLP-1) receptor agonists, drugs commonly prescribed for obesity and diabetes treatment. The sharpest decline was seen in the 0.25 mg starter dose, which fell by 37%. Analysts from Jefferies suggest that this reduction might indicate that Novo Nordisk is restricting supplies of the starter dose, potentially due to supply chain bottlenecks.
These supply issues arise at a crucial time, as Eli Lilly has recently resolved shortages of its competing weight-loss drugs, Mounjaro and Zepbound. This puts Novo Nordisk at a disadvantage, as Eli Lilly may capitalize on the opportunity to attract Wegovy's customer base.
Jefferies has also highlighted the risk that if Novo Nordisk fails to address these supply constraints promptly, it may have to revise its sales forecasts for Wegovy in the U.S. for the fourth quarter of 2024. Previously, the bank had anticipated a 30-35% increase in American Wegovy sales during that quarter, projecting up to 300,000 prescriptions per week by year-end. However, with the ongoing shortage of the starter dose, achieving these targets may become increasingly challenging. As the competitive landscape shifts, Jefferies warns that Novo Nordisk faces significant risks to its growth in the obesity market.
