Novo Nordisk’s (NOVO) battle with Hims & Hers (HIMS) may prove costly in the long run as the telehealth company positions itself as the consumer-facing layer of the drug market — potentially limiting Novo’s access to the highly lucrative weight-loss segment.
Investor concerns have already begun to materialize. In the wake of Novo ending its collaboration with Hims, the company’s stock plunged by $60 billion in a single day on Tuesday — five times the total market cap of Hims & Hers, noted stock analyst Shay Boloor.
“This could’ve played out very differently if they had embraced HIMS instead of dismissing the disruptor building the consumer layer they clearly weren’t ready to own,” Boloor said.
He added that Novo “underestimated the shift” underway in the consumer health market.
Since Novo terminated its agreement with Hims last month, citing allegations of illegal mass compounding of weight-loss drugs and deceptive marketing tactics, Novo’s stock has fallen more than 20%. It now trades just below $54 per share, with a market cap of approximately $188 billion.
The breakup hasn’t been easy on Hims either. The stock dropped 34% in a single day following the breakup announcement. However, it has since rebounded and is now trading around $60 per share, roughly in line with its price before the agreement was terminated on June 23.
Now, Novo is scrambling to reassure investors that it still holds a leading position in the weight-loss drug market, even as rivals gain ground.
Novo cuts full-year outlook as competition intensifies
As the maker of the blockbuster obesity drugs Wegovy and Ozempic, Novo Nordisk has been dominating the U.S. weight-loss market. But competition is mounting, particularly from U.S. rival Eli Lilly, whose drug Zepbound has shown promise in helping patients maintain weight loss.
A recent study found that Zepbound patients maintained their weight loss for at least three years, with most regaining no more than 5% of the weight they had lost.
In response to growing market pressure, Novo Nordisk has cut its full-year forecast. The company now expects sales growth of 8% to 14%, down from its earlier forecast of 13% to 21%.
Profit growth is also expected to slow, with a new range of 10% to 16%, compared to a previous estimate of 16% to 24%.
“For Wegovy in the US, the sales outlook reflects the persistent use of compounded GLP-1s, slower-than-expected market expansion and competition,” the company said in a statement.
The revised outlook comes as Novo introduces its new CEO, Maziar Mike Doutsdar, following the sudden departure of longtime chief Lars Fruergaard Jorgensen two months ago.
Novo is scheduled to report second-quarter earnings on Aug. 6.
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