Will Wegovy and Ozempic Fuel Novo Nordisk's Next Big Quarter?

Key Revenue Drivers for Novo Nordisk

Novo Nordisk, a leading pharmaceutical company, derives the majority of its revenue from two groundbreaking drugs: Ozempic and Wegovy. Both medications are based on semaglutide, a GLP-1 receptor agonist used to treat type II diabetes (T2D) and obesity, respectively. The growing demand for these drugs has been fueled by expanded labeling that allows for broader prescription usage, significantly boosting sales.

In the first quarter of 2025, Ozempic generated DKK 32.7 billion in sales, representing a 15% increase compared to the previous year. Meanwhile, Wegovy saw an impressive 83% rise in sales, reaching DKK 17.4 billion. Together, these two drugs accounted for approximately 66% of the company’s total revenue during the quarter. However, the growth rates were somewhat affected by the availability of compounded GLP-1 versions in the market. Investors are closely watching the company’s second-quarter results, scheduled for August 6, to gain further insights into the performance of these key products.

Regulatory and Market Strategies

In early 2025, the FDA removed semaglutide drugs from its shortage list, allowing Novo Nordisk to push for a federal ban on mass compounding of the drug. This move aims to limit the availability of unauthorized versions in the U.S., which is the company’s largest market. Additionally, Novo Nordisk has implemented programs such as the NovoCare Pharmacy and exclusive formulary coverage with CVS Caremark to improve access to Wegovy. The company is also expanding internationally, which is expected to contribute to stronger performance in the second quarter.

Looking ahead, several potential label expansions could drive continued growth. These include Ozempic for peripheral artery disease, an oral version of Wegovy, and a higher-dose injectable version of Wegovy. To meet increasing demand, Novo Nordisk is also ramping up its manufacturing capacity. Beyond Ozempic and Wegovy, the company’s oral T2D drug Rybelsus and its portfolio of insulin and rare disease treatments continue to support overall revenue growth.

Intensifying Competition in the Obesity Market

Eli Lilly has emerged as a strong competitor in the obesity space, offering tirzepatide-based medications under the brand names Mounjaro for T2D and Zepbound for obesity. Despite being on the market for less than three years, these drugs have become significant contributors to the company’s revenue. In the first quarter of 2025, combined sales of Mounjaro and Zepbound reached $6.15 billion, accounting for about 48% of Eli Lilly’s total revenue. The company is set to release its second-quarter earnings results on August 7.

Other companies, such as Viking Therapeutics, are also making strides in the development of GLP-1-based therapies. Viking Therapeutics recently initiated two late-stage studies evaluating a subcutaneous formulation of its investigational obesity drug, VK2735. A mid-stage study is currently underway to assess an oral version of the drug, with data expected later this year.

Stock Performance and Valuation

Novo Nordisk's stock has experienced a decline year-to-date, losing 24.1% compared to a 0.1% drop in the industry. The company has underperformed both the sector and the S&P 500 over the same period. As of now, Novo Nordisk is trading at a premium to the industry, with a forward price/earnings ratio of 15.14, slightly higher than the industry average of 15.04. However, the stock is trading well below its five-year mean of 29.25.

Earnings estimates for 2025 have improved slightly, rising from $3.84 to $3.98 per share over the past 60 days. For 2026, however, estimates have decreased from $4.64 to $4.57 per share. On a trailing 12-month basis, Novo Nordisk’s return on equity stands at 80.95%, significantly higher than the 33.55% average for large drugmakers.

Currently, Novo Nordisk holds a Zacks Rank of #3 (Hold), indicating a neutral outlook. Investors are advised to monitor the company’s future performance and any developments in its product pipeline.