Novo Nordisk(NVO) - 2025 Q1 - Quarterly Report

Q1 2025 Performance Overview Novo Nordisk reported strong Q1 2025 sales growth driven by GLP-1 treatments, but revised its full-year outlook downwards due to US compounded GLP-1 impact, while advancing key R&D milestones Q1 2025 Financial Highlights (vs. Q1 2024) | PROFIT AND LOSS | Q1 2025 (DKK million) | Q1 2024 (DKK million) | Growth as reported | Growth at CER* | | --- | --- | --- | --- | --- | | Net sales | 78,087 | 65,349 | 19 % | 18 % | | Operating profit | 38,791 | 31,846 | 22 % | 20 % | | Net profit | 29,034 | 25,407 | 14 % | N/A | | Diluted earnings per share (in DKK) | 6.53 | 5.68 | 15 % | N/A | *CER: Constant exchange rates - The full-year outlook was reduced due to lower-than-planned branded GLP-1 penetration in the US, impacted by rapid compounding expansion, with the company actively working to prevent unlawful compounding[6] - Key R&D advancements include completing the pivotal trial for CagriSema for obesity and filing for US approval of oral semaglutide 25 mg, a potential first-in-class oral GLP-1 treatment[6][7] Strategic Aspirations and Performance Highlights The company tracks Q1 2025 performance against strategic goals, achieving 65% CER growth in Obesity care sales but experiencing a slight decline in Diabetes market share and a 37% increase in CO2e emissions Q1 2025 Performance vs. Strategic Aspirations | Category | Aspiration | Q1 2025 Performance | |---|---|---| | Commercial | Strengthen diabetes leadership to >1/3 | Diabetes value market share declined to 33.3% | | | > DKK 25B in Obesity care sales by 2025 | Obesity care sales grew 65% (CER) to DKK 18.4B | | | Sustained growth for Rare Disease | Rare disease sales grew 3% (CER) to DKK 4.6B | | Financials | Solid sales and operating profit growth | Sales grew 18% (CER), Operating profit grew 20% (CER) | - Key innovation milestones in Q1 include the successful REDEFINE 2 trial for CagriSema, regulatory submission of oral semaglutide 25 mg for weight management, and in-licensing of a GLP-1/GIP/Glucagon triple agonist[15] - ESG highlights include a 37% increase in CO2e emissions compared to Q1 2024, an increase in women in senior leadership to 42%, and providing medical treatment to 43.1 million people with diabetes and 2.6 million with obesity[9][10][11] Commercial Execution Commercial execution highlights strong sales growth across regions and therapeutic areas, driven by GLP-1 treatments, despite challenges from compounded products and supply constraints Geographic Sales Development Overall sales grew 18% at CER, with strong performance across all regions, driven by significant growth in Obesity care in both US and International Operations Sales Growth by Geographical Area (Q1 2025) | Geographical Area | Sales (DKK million) | Growth at CER | |---|---|---| | US Operations | 44,316 | 17 % | | International Operations | 33,771 | 19 % | | - EUCAN | 14,765 | 13 % | | - Emerging Markets | 8,790 | 24 % | | - APAC | 4,594 | 25 % | | - Region China | 5,622 | 22 % | | Total Sales | 78,087 | 18 % | - US Operations growth was driven by a 40% CER increase in Obesity care sales and a 10% CER increase in GLP-1 diabetes sales, though growth was negatively impacted by compounded GLP-1s[21] - International Operations growth was driven by a 137% CER increase in Obesity care sales and a 13% CER increase in GLP-1 diabetes sales, with growth affected by periodic supply constraints[22] Sales Development by Therapeutic Area Sales growth was primarily driven by the Diabetes and Obesity care segment, which grew 19% at CER, led by 65% CER growth in Obesity care sales from Wegovy® Sales by Therapeutic Area (Q1 2025 vs Q1 2024) | Therapy Area | Sales Q1 2025 (DKK million) | Growth at CER | |---|---|---| | Diabetes and Obesity care total | 73,468 | 19 % | | - Total GLP-1 (Diabetes) | 39,574 | 11 % | | - Total Insulin | 14,997 | 3 % | | - Total Obesity care | 18,424 | 65 % | | Rare disease total | 4,619 | 3 % | | Total Sales | 78,087 | 18 % | Diabetes Care Diabetes care sales rose 8% at CER to DKK 55.0 billion, driven by GLP-1 products, despite a slight decrease in global diabetes value market share to 33.3% Global Diabetes Care Sales & Market Share | Metric | Feb 2025 | Feb 2024 | Q1 2025 Sales (DKK M) | Q1 2025 Growth (CER) | |---|---|---|---|---| | Total Diabetes Care | 33.3% | 33.9% | 55,044 | 8% | | GLP-1 Diabetes | 54.0% | 55.3% | 39,574 | 11% | | Insulin (Volume Share) | 43.5% | 45.1% | 14,997 | 3% | - Ozempic® sales grew 15% at CER to DKK 32.7 billion, while Rybelsus® sales grew 13% at CER, and Victoza® sales declined by 46% as the market shifts to once-weekly treatments[36] Obesity Care Obesity care sales surged 65% at CER to DKK 18.4 billion, primarily driven by Wegovy®, despite the impact of compounded GLP-1s on US uptake Obesity Care Sales Growth (Q1 2025, CER) | Geographical Area | Sales Growth (CER) | |---|---| | Global | 65 % | | US Operations | 40 % | | International Operations | 137 % | - Wegovy® sales increased by 83% at CER, while Saxenda® sales decreased by 35% at CER as the market moves to more effective once-weekly treatments[52] - In the US, the volume of compounded GLP-1s is estimated to have negatively impacted Wegovy® prescription uptake, with Novo Nordisk actively focused on preventing unlawful compounding and expanding patient access[52][53] Rare Disease Rare disease sales increased 3% at CER to DKK 4.6 billion, driven by rare endocrine disorders, while rare blood disorder products saw a slight decline Rare Disease Sales Growth (Q1 2025, CER) | Geographical Area | Sales Growth (CER) | |---|---| | Global | 3 % | | US Operations | 1 % | | International Operations | 5 % | - Sales of rare endocrine disorder products grew 14% at CER, while rare blood disorder products decreased by 1% at CER[58] Financials The company's financial performance is detailed, highlighting significant increases in net sales, operating profit, and free cash flow, alongside changes in gross margin and cost structures Financial Highlights for Q1 2025 Novo Nordisk achieved a 19% increase in net sales and a 22% rise in operating profit in Q1 2025, alongside a slight gross margin contraction and significant increases in capital expenditure Detailed Financial Highlights (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | % Change | |---|---|---|---| | Net sales (DKK M) | 78,087 | 65,349 | 19% | | Gross margin | 83.5% | 84.8% | -1.3pp | | Operating profit (DKK M) | 38,791 | 31,846 | 22% | | Operating margin | 49.7% | 48.7% | +1.0pp | | Net profit (DKK M) | 29,034 | 25,407 | 14% | | Diluted EPS (DKK) | 6.53 | 5.68 | 15% | | Capital expenditure (DKK M) | 13,422 | 8,474 | 58% | | Free cash flow (DKK M) | 9,492 | 5,020 | 89% | Development in Costs and Operating Profit Operating profit grew 20% at CER to DKK 38.8 billion, despite a gross margin decline due to acquisitions and capacity expansion, and increased R&D costs - Gross margin declined to 83.5% from 84.8% YoY, reflecting amortisations and depreciations related to Catalent and costs for ongoing capacity expansions[65] - Sales and distribution costs increased by 10% at CER, driven by promotional activities for Wegovy® and Ozempic®[66] - R&D costs increased by 19% at CER, mainly due to increased late-stage clinical trial activity and early research activities within Obesity care[66] Cash Flow and Capital Allocation The company's cash flow generation and capital allocation strategy are detailed, emphasizing significant investments in capacity expansion and the decision to forgo a share buyback program Free Cash Flow and Capital Expenditure Free cash flow increased 89% to DKK 9.5 billion in Q1 2025, despite a 58% increase in capital expenditure for capacity expansion, leading to no share buyback program in 2025 Cash Flow and CAPEX (Q1 2025 vs Q1 2024) | Metric (DKK billion) | Q1 2025 | Q1 2024 | |---|---|---| | Free cash flow | 9.5 | 5.0 | | Capital expenditure (PP&E) | 13.4 | 8.5 | - Capital expenditure primarily reflects investments in additional capacity for API production and fill-finish capacity for current and future products[74] - Due to the significant increase in CAPEX investments in 2025, Novo Nordisk is not conducting a share buyback programme[77] 2025 Outlook The company's 2025 financial guidance has been updated, reflecting revised sales and operating profit growth projections and free cash flow forecasts due to market dynamics Updated 2025 Financial Guidance Novo Nordisk has lowered its full-year 2025 guidance for sales, operating profit, and free cash flow due to compounded GLP-1s in the US, while capital expenditure expectations remain unchanged 2025 Outlook Revision (at CER) | Metric | New Outlook (May 7, 2025) | Old Outlook (Feb 5, 2025) | |---|---|---| | Sales growth | 13% to 21% | 16% to 24% | | Operating profit growth | 16% to 24% | 19% to 27% | | Free cash flow (bDKK) | 56 to 66 | 75 to 85 | - The updated sales outlook reflects lower-than-planned penetration of branded GLP-1 treatments in the US, impacted by compounded GLP-1s[79] - The outlook assumes a reduction in patients on compounded GLP-1 treatment during the second half of 2025, following the FDA's removal of semaglutide injectables from the drug shortage list[80] - Capital expenditure is still expected to be around DKK 65 billion in 2025, reflecting the expansion of the global supply chain[83] Innovation and R&D Key advancements in the company's R&D pipeline and business development activities are highlighted, including pivotal trial results, new regulatory submissions, and expanded early-stage programs Pipeline and Business Development The R&D pipeline saw significant progress with successful trials for CagriSema, key regulatory submissions for oral semaglutide and MASH treatment, and expansion of the early-stage obesity pipeline through new licensing agreements - The REDEFINE 2 trial for CagriSema demonstrated a superior 15.7% weight loss in adults with obesity or overweight and type 2 diabetes[92] - Key regulatory submissions include oral semaglutide 25 mg for weight management in the US and once-weekly semaglutide 2.4 mg for MASH in both the EU and US, with the latter granted priority review by the FDA[93][94] - Business development activities included exclusive license agreements for UBT251, a GLP-1/GIP/glucagon triple receptor agonist, and LX9851, an oral non-incretin candidate for obesity[98][99] Purpose and Sustainability (ESG) The company's environmental and social performance is detailed, including increased CO2e emissions due to acquisitions, expanded patient reach, and growth in employee numbers and female leadership representation Environmental and Social Performance Total CO2e emissions increased 37% YoY due to acquisitions and investments, while patient reach expanded to 45.7 million, and women in senior leadership rose to 42% ESG Performance Highlights (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | % Change | |---|---|---|---| | Total CO2e emissions (1,000 tonnes) | 667 | 486 | 37% | | Total patients reached (millions) | 45.7 | 41.8 | 9% | | Total employees (FTEs) | 77,406 | 66,015 | 17% | | Women in senior leadership | 42% | 41% | +1pp | - The increase in CO2e emissions was mainly driven by the acquisition of new production sites, increased consumption of natural gas, and use of non-renewable electricity at these new sites[103] - The number of full-time employees increased by 17%, mainly driven by Product Supply and the acquisition of Catalent, which accounted for around 3,000 employees[110] Corporate Governance and Legal Matters Recent changes in corporate governance, including executive management reorganization, and updates on ongoing legal matters concerning compounded GLP-1 products are detailed Corporate Governance Significant changes in Executive Management were announced in April 2025, involving a reorganization of roles and responsibilities following a key departure - Key changes in Executive Management were implemented in April 2025 following the departure of the EVP of Commercial Strategy & Corporate Affairs[114] - The changes include promotions and shifts in responsibility for Ludovic Helfgott (Product & Portfolio Strategy), Thilde Hummel Bøgebjerg (Quality, IT & Environmental Affairs), and Tania Sabroe (People & Organisation and Global Communication)[114][115] Legal Matters The company is involved in litigation regarding the FDA's semaglutide shortage resolution, with a federal court denying a preliminary injunction sought by compounding organizations, ending enforcement discretion for 503A pharmacies - Novo Nordisk is involved in litigation regarding the FDA's resolution of the semaglutide injectables shortage and the subsequent allowance of compounding[117] - A US federal court denied a motion for a preliminary injunction filed by compounding-related organizations, ending the period of enforcement discretion for 503A compounding pharmacies on April 24[117] Financial Statements and Appendices This section provides detailed financial statements and appendices, including unaudited condensed financial statements and reconciliations for non-IFRS measures Detailed Financial Data The appendices provide detailed financial information, including unaudited condensed financial statements, reconciliations for non-IFRS measures, and restated 2024 sales data by new geographical reporting structure - Appendix 2 provides the detailed Income Statement and Statement of Comprehensive Income for Q1 2025[134] - Appendix 7 provides definitions and reconciliations for non-IFRS financial measures used in the report, such as Net sales at CER, EBITDA, and Free cash flow[141] - Appendix 8 provides a detailed restatement of sales data for 2024, broken down by the new geographical areas (US Operations and International Operations, which includes EUCAN, Emerging Markets, APAC, and Region China)[152][153]