Novo Nordisk doubles down on Trump-friendly sales strategy

Wegovy-maker Novo Nordisk said Wednesday that it was doubling down on direct-to-consumer sales as it contends with copycat compounders and Washington’s demands for lower domestic drug prices.

Chief Financial Officer Karsten Munk Knudsen said that the pharma giant’s cash channel, which lets patients purchase its blockbuster weight loss treatment for less than half its usual price per month, was key to regaining market share and meeting U.S. policy needs.

“The market is evolving in the sense that there is both an insured channel but then there is a cash channel, where patients can access our products directly without intermediaries,” he told CNBC’s “Squawk Box Europe.”

Knudsen said an ultimatum delivered last week by President Donald Trump demanding pharma firms cut the price of U.S. prescription drugs to “most favored nation” (MFN) levels by Sept. 29, had “resonated” and that Novo “shares the same objective” of lowering prices.

Shares were down 2% by 11:50 a.m. London time (6:50 a.m. ET).

The U.S. consistently pays the most in the world for many prescription drugs, due in part to the its highly complex and fragmented reimbursement system and the prevalence of intermediaries, known as pharmacy benefit managers (PBM).

Novo Nordisk’s CFO nevertheless said that the company — and the industry at large — remained in negotiations with the administration on appropriate policy.

“We believe there’s more discussions to be had between the industry and the president for the legislation to come through to find the right format,” Knudsen added.

Novo Nordisk launched its direct-to-consumer online pharmacy, NovoCare, in March in a bid to make its weight-loss injection available to millions of uninsured patients. The platform lowers the cash price to $499 per month compared to Wegovy’s list price before insurance and other rebates which is almost $1,350 per month.

It comes as the company — and to a lesser extent rival Zepbound-maker Eli Lilly — have struggled to fend off increased competition from cheaper compounded weight loss drugs. Lily launched its lower-cost LillyDirect service at the start of 2024.

In a surprise profit warning last week, Novo said that “unsafe and unlawful mass compounding” had continued since May 22, a deadline set by the U.S. Food and Drug Administration for compounders to cease sales following the end of its drug shortage ruling.

Novo said weaker second-half U.S. sales growth forecasts for Wegovy and its Ozempic diabetes treatment had prompted the revision. It now expects annual sales growth of 8% to 14% at constant exchange rates, along with annual operating profit growth of 10% to 16%.

Rajesh Kumar, head of life sciences and healthcare research at HSBC, said Wednesday that Novo had been disproportionately impacted by the rise of compounded copycats versus Lily given the name recognition around Wegovy.

“The brand recognition for Wegovy is significantly greater [than for competitors],” Kumar told CNBC’s “Squawk Box Europe.” Lilly’s Zepbound drug came to market in the U.S. around two years after Wegovy.

“Market research implies that 75% to 80% of compounded pharmacies are targeting Wegovy because that’s a brand which consumers identify very easily. So you’re seeing a disproportionate impact from the compounders.”

Knudsen described compounding as the “largest single factor” impacting Novo’s U.S. market share, but nevertheless added that compounding also “expands the market because [it] is a sign of significant demand for these products.”   

Wegovy sales climbed in the second quarter, rising 67% year-on-year at constant exchange rates to 19.53 billion Danish kroner ($3.03 billion), the company said in its latest earnings report Wednesday. That was slightly below the 20 billion Danish kroner forecast by analysts in an LSEG poll.

Overall sales rose 13% year-on-year at constant exchange rates to 76.86 billion Danish kroner in the three months to June, just ahead of the 76.6 billion Danish kroner analysts forecast.

Quarterly net profit came in at 26.5 billion Danish kroner, versus 26.6 billion Danish kroner expected.

The Danish drug maker reiterated its full-year outlook and said that it would cut costs and sharpen its commercial focus after the company’s share price took a beating on last week’s announcement, extending prolonged declines since its June 2024 peak.

“We are taking measures to sharpen our commercial execution further, and ensure efficiencies in our cost base while continuing to invest in future growth,” outgoing President and CEO Lars Fruergaard Jørgensen said in a statement accompanying the results.

Incoming CEO Maziar Mike Doustdar, whose appointment surprised markets last week and takes effect Thursday, said that he was assuming the role with “a sense of urgency, a laser focus on high performance, and a fierce determination for Novo Nordisk to aim higher than it’s ever done.”

Fruergaard Jørgensen’s surprise ouster in May came as the company has also been trying to regain investor confidence following a series of disappointing trial results for its next-generation obesity drug candidate, CagriSema.

Meantime, the wider pharmaceutical industry is facing the prospect of significant White House tariffs — which President Trump said Tuesday could run as high as 250%.

Knudsen said Wednesday that he believed the company was in a strong position to weather U.S. tariffs, noting that it has a strong and growing U.S. manufacturing presence.

“When we talk about GLP-1s, which is the active ingredient in Ozempic and Wegovy, we are actually exporting more from the U.S. than we are importing, in terms of volumes,” he said.

“So the trade balance, if you can call it that, is actually in a rather good place and putting Novo Nordisk in, I think, a better place than many other pharmaceutical companies.”