Novo Nordisk - Q4 2025 London conference call

Transcript

James Quigley (Pharma Analyst)

Good afternoon, everyone. I'm James Quigley, European Pharma Analyst here at Goldman Sachs, and it's a pleasure to welcome you to this fourth-quarter results presentation for Novo Nordisk. We've got the pleasure to be joined by Mike Doustdar, CEO; Karsten Munk Knudsen, CFO; and Martin Holst Lange, the Chief Scientific Officer. So with that, Mike, thanks for joining us. Over to you.

Mike Doustdar (CEO)

Thank you very much for hosting us. I have promised that I'll try to go through these slides because I'm sure you've seen these slides as fast as possible so we can actually get a lot of questions into the dialogue of the hour that we have. Forward-looking statement. This is a slide you have seen for the last five years. We'll retire it very soon and give you a new one at the Capital Market Day. It's one that we created back in 2019, basically setting some guidance for ourselves, what we want to do. So many of the things have happened. Some of it have positively surprised us, some of it negatively.

What we are probably most proud of is, as a company, we've been more than doubling our sales and profit since this last five years, adding DKK 76 billion to our obesity care. Rare diseases where I would say many people don't still put into their models enough has been completely revamped compared to five years ago, and we are super excited about Mim8 launch and Etavopivat launch. And in general, of course, it's an area where we leave to the side, but it's getting healthier and healthier, and last year, you know, grew by from 9%. And of course, the sheer number of the people we're treating today is 16 million more than it was back in 2019, so we have 46 million people on our products.

If you look at last year, and I know it's long overdue, I will not spend so much time on it, it was a year of, in some way, disappointment when you think about our triple profit warnings. But the forecast that initially was given, you know, at 20% ended up to be on the high side. It came on the back of a 2024 that was incredibly, you know, robust. So we made the 2025 forecast, and we ended up doing half of what we basically had forecasted, so we did 10% growth on the back of U.S. and I/O growth that you see there: 8% in U.S., 14% in international operations. And pretty much all regions did well, with maybe the exception of China. We had higher hopes for China.

The main reason for China being below expectation is simply because Wegovy and the obesity is right now moving fast in the e-health channels in China. In that channel, you're not allowed to promote a product that's solely for obesity. We have Wegovy, and we are not allowed to sell directly in online channels Wegovy while our competitor, Mounjaro, being a single brand of diabetes and obesity, has a bit of an advantage over us. It's something that we're trying to fix, but that's really why China numbers are below they should be. In general, I would say the obesity market doubled up, and we were able to capture 31% growth out of that, 73% in international operations on the back of number of new launches that we did on Wegovy, and 15% in U.S.

Where we are putting a lot of emphasis on the dialogues over the last couple of days to show some data to you is on the Wegovy pill. It has probably, so far, been one of the best launches that pharma has seen. I speak a little bit cautiously because, not because I'm not excited, but because it's early days. It's one month into it. But I have to say that in this one month, it has blown our own expectation, how well it has done. When you think about why is it doing well - and I'm sure we're gonna have a lot of questions on it as well - predominantly it's because what has hurt us on the injectable side is helping us on the pill side.

This obesity market, now two years into deep competitiveness element of it with Lilly as well as compounders, has taught Novo Nordisk it's first and foremost about the magnitude of weight loss. I think kidney matters, heart matters, liver matters, but not if you are perceived to have a lower weight loss than your competition. We've painfully realized that with our injectable franchises, but we've equally get incredibly convinced that the pill will do well also when competition arrives because it does 16.6% weight loss while the competition only does 12.4%. And in addition to the weight loss, of course, of 16.6%, then we have the label from Wegovy injection, so the cardiovascular benefits that we have seen with the injection is translated into the pill. And this actually gives us that extra plus that we need.

As of the latest data point they have shared with you, we have some 50,000 prescriptions, new prescriptions, NBRxs in the U.S., that translates to some 170,000 patients having chosen to go in this direction. And that, of course, is super exciting. And just to put that in perspective, today or the latest data point in the U.S. shows no other brand, including those of our competitor, is having more NBRxs than the Wegovy brand has. So that's really good. But again, just the first month, and our job, of course, is to continue that as we go forward, and we'll get into that dialogue how we plan to do that, as we go forward. I think it's yours, Karsten.

Martin Holst Lange (Chief Scientific Officer)

It's me, first.

Karsten Munk Knudsen (CFO)

It's you.

Martin Holst Lange (Chief Scientific Officer)

And then,

Karsten Munk Knudsen (CFO)

I'll actually better do this one.

Martin Holst Lange (Chief Scientific Officer)

Also, yeah, you can do it too. I'm gonna do it fast also. So drive innovation is obviously what we continuously have to do. There's a lot of competition out there and having the broadest but also the deepest pipeline in the space of diabetes and obesity, but also our other therapy areas is what we're doing now indeed. 2026 is gonna be a really exciting year in diabetes and obesity and not going through everything. A lot of readouts, a lot of initiations across Cagrilintide, Semaglutide, CagriSema, Amycretin, and two tri-agonists, one being a GLP-1 GIP glucagon, which is an external acquisition, one being the internal GLP-1 GIP amylin analog. That's really exciting. And, again, a lot of readouts, a lot of initiations, a lot of regulatory decisions across the board.

In our comorbidity space, we'll see the first readout of Ziltivekimab, our anti-IL-6, the ZEUS trial will readout in second half of this year. It's rarely mentioned these days, but high risk. We have to acknowledge it's a first but also really, really high potential if the data comes out with good efficacy, good safety, and tolerability. And then finally, obviously, regulatory approval of Mim8 in the U.S., in Europe, for treatment of hemophilia A with and without antibodies and the phase III readout of Etavopivat, which is for sickle cell disease. Again, a novelty for us, but in this space of huge unmet need, very, very high potential as well. So a lot of interesting things happening in 2026.

Karsten Munk Knudsen (CFO)

Indeed, there is. And when we look at capsule allocation, that's also happening in 2026. Just looking backwards on 2025, so as you've seen, we delivered DKK 100 billion in net profit for the year of 2025. And we actually managed to convert that into almost DKK 120 billion in cash from operations, so our cash conversion is really strong. The way we deployed our capital, or allocated our capital, is DKK 60 billion in what we call CAPEX, so that's construction of manufacturing capacity. Then we spent DKK 30 billion on BD/M&A. The bulk of that is linked to the Akero transaction for MASH F4. And then we paid out dividends, DKK 53 billion related to 2025.

So, with the dividend that is being proposed at the upcoming AGM, we'll have increased our dividend per share for 30 consecutive years. So a very consistent approach, 50% payout ratio. Looking into 2025, we'll continue to invest in building, invest in the business, invest in growth, both on the CAPEX side, coming down the mountain of CAPEX, so we're finalizing our facilities. With attractive assets, we'll continue to invest in BD, pending that we have attractive assets. And then on cash return to shareholders, consistent approach to dividends, you should expect. And then we initiated a share buyback program of DKK 15 billion that just started this week. In terms of outlook for the year, we're guiding between -5% and -13% on the top line.

It's driven by some certain extraordinary effects, including LOE in international operations, in specific markets, impact from MFN in the U.S. as well as declining prices, mainly in the U.S., linked to a higher proportion of cash business, as well as rate enhancements on the insured side. Of course, we continue to drive volume, and we are looking into volume growth and more patients being on Novo products in 2026. However, the price effect outweighs that. Then we've, this time around, we have guided in adjusted measures. And the reason why we did that change is due to the fact that here in the first quarter of 2026, we have a provision reversal, so a favorable outcome, of the so-called 340B rebate provision.

So we'll have a positive one-off accounting non-cash impact in the first quarter of $4.2 billion. So, of course, it's not fair to look at the underlying business performance, when we have such an effect in our numbers. And that's why we have adjusted measures, both on top-line sales as well as on operating profits. So that concludes the presentation. And now we are over to Q&A, which Michael Novod has promised to facilitate.

Martin Holst Lange (Chief Scientific Officer)

Thanks, Karsten. So, let's start the Q&A. There's plenty of time. Let's start with the host, James.

Speaker 12

There should be a mic going around.

James Quigley (Pharma Analyst)

Thank you, James Quigley from Goldman Sachs. So, first question for me is on the Oral Wegovy launch. So the launch has been very strong, as you said, on the initial scripts. But could you talk to any metrics that you have, and on current levels of awareness in the U.S.? You highlighted your Super Bowl advert, but how much support are you putting behind the product in terms of TV advertising to raise awareness, and how much of a multiplier effect are you seeing with partnerships from your telehealth and pharmacy collaborations? And also, we'd be interested to, in your initial expectations for stay time, demographics, any expected trends you're seeing from pre-launch marketing as well as the early stages of the launch.

Mike Doustdar (CEO)

Wow. There was a lot of,

Martin Holst Lange (Chief Scientific Officer)

David said one question.

James Quigley (Pharma Analyst)

No, it's just questions.

Mike Doustdar (CEO)

So we have gone really all in, and I teased the Super Bowl ad, but I didn't mention if you would walk into Boston or New York Grand Central Terminal over the last weekend, you would see probably no other ad than the Wegovy pill ad. And I literally mean no other ad than the Wegovy pill ad. And we're doing it with our partners, I would say. We have decided that this has the right price point at $149, and we need to really make sure quite quickly we get to high numbers, for a couple of reasons. One is because it's important for us to basically use the first mover advantage and demonstrate on the back of real patient data that this 30-minute dosing flexibility that our competition is speaking to is a non-issue.

I could tell people it's a non-issue, but why should people believe me when thousands of people say it's not an issue? It's a very different point. We have 1.5 million people on Rybelsus that never complained about that. The 170,000 today also are not complaining about that. And we will, of course, factually prove that and document that as we go forward before we get competition to really make sure that the world knows when you have seriously differentiated weight loss profile on the back of CV benefits, then like many other medications, all thyroid medication, it's okay that you just take the pill and then take a shower and then go downstairs and have your breakfast. So that's, I think, the more patients initially, the better.

I'm super excited about it. I'm also super excited that many of these patients are new patients. 88% of them, as I have mentioned on the call, are buying the 1.5 mg dose, which, in many ways is good for us. One, because, of course, we're really expanding the market. But two, price-wise, there's only upside because my lowest dose is the lowest price. So no matter how you look at this, there is, you know, a plus in this notion than not. And these patients, of course, will titrate up to a higher dose. To make sure that this continues, we will continue putting a lot of efforts behind it financially. I will not get into the numbers for competitive reasons.

But I can tell you that there is a good reason why it has been the best launch ever. We are really putting the best effort behind it together with our partners. I think the sheer number of the partners have been critical, joining in at the very beginning.

Martin Holst Lange (Chief Scientific Officer)

Matt?

Matt Weston (Pharmaceutical Research Analyst)

Thank you. It's Matt Weston from UBS. Can I ask about price? Because I think people are really struggling to triangulate your guidance and price comments. So Lilly was very clear on its call yesterday that they anticipated mid-teens price declines in the market offset by volume growth. So would you agree with that mid-teens view as an overall price pressure in the U.S. market? Or is there something different happening in the Novo portfolio, whether it's a greater shift to cash or an incremental rebate to insurers to try and keep Wegovy going that means that you have a different price outlook than your biggest competitor?

Mike Doustdar (CEO)

You can say that.

Karsten Munk Knudsen (CFO)

Yep. So, I'll take that one. Thanks, Matt, for that one. It's not for me to comment on Lilly's guidance and guidance metrics. I think what we've been saying is that pricing is coming down both for GLP-1s in diabetes. So we see a continuation of the declining prices for GLP-1s in diabetes, mainly Ozempic. So historically, we've been talking about underlying -10 to -15. So that has been kind of the directional guidance. No changes to that. And in obesity, the key point is that the factors we're looking into is rate enhancement in the insured channel. Channel mix, i.e., more towards cash. And then an MFN impact, in terms that both entails cash pricing but also Medicaid and Medicare Part D pricing.

So if you put all that together on the Wegovy injectable, then you come to a quite substantial price reduction for the Wegovy injectable. And then for the oral, that we only have a starter price, so we don't have anything in the comparator. So the decline that we are implicitly guiding for in our U.S. business being, say, in the teens, that is price-driven. So I think that's as close as I get it. We're not guiding specifically on price and volume as our competitor.

Martin Holst Lange (Chief Scientific Officer)

Thanks. Pete?

Speaker 12

Thanks, Pete, but I'll be in P. Just 2 questions. Just on Wegovy pill, Mike, beyond the U.S., I mean, Eli Lilly said yesterday they filed Orforglipron in 40 countries. Could you just remind us, you know, sorry to put you on the spot, where, where you are in your in your filing strategy for Wegovy pill, outside the U.S.? And then second, that I understand completely that, you know, Wegovy pill is your, your route to salvation. So and you've had about 1,000 questions on that in the last 48 hours. So just a different question on Ozempic. You know, we've seen these scripts. We all know it. It's a gentle decline.

Is there anything that can be done there, or is that just the sort of the situation in the U.S. that it will continue to be a gentle decline as you focus all your efforts on Wegovy pill and Wegovy? Thank you.

Karsten Munk Knudsen (CFO)

Yep. So on the registration and regulatory approvals, we have made it quite open, Pete, that we have filed for regulatory approval of the pill in the E.U. and U.K. When we say that, we don't go ahead and count the number of the countries that are inside European Union. If I was playing, you know, the catch-up game and I needed some positive news, I probably would say not E.U. but turn that into whatever number of countries that it may be and add one or two to it. We do know that the process for registration in many of the emerging markets is that you need to have the FDA approval and/or EMA approval, and you use the standard file of those to go to an emerging market and get regulatory approval.

We know that it's not possible that you basically get parallel registration in Philippines, before you have either EMA or FDA approval. So that I leave for you to kind of read the law and know where the numbers come from and for Lilly to perhaps explain that a little bit more in detail. On the Ozempic element, I would say there are a couple of things. I know it's kind of not a secret anymore. If you read the news the last three days, there's been articles saying Novo Nordisk is launching Ozempic pill. And then that's going to happen. So we are going to actually revitalize a bit of a Ozempic brand around bringing Rybelsus in a different way, let's call it that, into the market. And that you will see this year.

Then, then Amie, who's sitting in the back responsible for international operations, would also tell you that we are moving much faster than before with Ozempic 2.0 in number of his markets. And we did not do some of those activities before, last year, also somewhat partially because of supply situation, I have to say. And now we actually have our hands more open. But on the diabetes part, where I think rightfully so a number of you are a bit worried the diabetes has gone down a bit while, you know, growth of, growth is coming from obesity, I also will say that we have the best, you know, insulin in the world, the weekly insulin in the world, and we only have it in three markets today.

Mike Doustdar (CEO)

And we didn't, again, go behind that and launch it in more because we've been busy managing whatever, you know. And I think now it's a good time to open up some of those books and see what else we can do with our diabetes franchise. And all of that, I think, is in the planning. Richard?

Richard Vosser (Managing Director and Senior Analyst)

Thanks very much. Richard Vosser, JPMorgan. Maybe a couple of questions on international operations. Just thinking about the LOE that you've highlighted, the 5%. I think when we talk to Sandoz and others, there's maybe some delays there. So just your thoughts on that competition and what and what you're baking in. And then secondly, in IO, Mounjaro had, I think, very large numbers in international operations yesterday. So just your thoughts on the competition there. Maybe last time we were speaking, the UK, you were fighting back. How are you thinking about the rollout of injectable Wegovy? And you mentioned the 7.2 in other markets. What sort of growth can we see there? Thanks very much.

Mike Doustdar (CEO)

Very good point. I would say, the way the guidance is created for us and probably for Lilly and the other pharma companies is that we take our best guesstimates internally for our budgets at any point of time. Then we get it approved by the board. And then eventually, a month later, we come and introduce it to you with our upside and downside sheets. When we do that, then we use data that is usually from a month or so before, just for no other reason. And in that context, then you learn things along and we internally, of course, adjust for those with our so-called latest estimates. And, you know, quarter by quarter, we also let you know where we are up and down.

If you just take that as a, you know, guiding principle for all companies, then I would say that I am hearing today more possible upsides along the line that Sandoz is speaking to. They did not talk to that a month or two ago, but we're moving into it. I would say I'm hopeful that there will be maybe some delays here and there. And then we can, of course, to see some benefits on that, on our own targets and on what we have announced to you. On the other hand, I've also noticed that the preference share of Wegovy versus Mounjaro or Zepbound in the U.S. has a bigger spillover effect to the rest of the world due to social media, you know.

Brits and Colombians and the likes go to the same YouTube and learn from the same digital opinion leaders that are based in the U.S. And in the U.S., everyone thinks that Tirzepatide is a better product. Slowly, as they launch into my neck of the world also, they're benefiting, I would say, from that. So we are adjusting to that as we go along, albeit not giving up. And we do hope that with the launch of 7.2 in the U.S. initially, we will actually have that spillover effect into the rest of the world and benefiting from it. But we need to see it. And it has a delay impact, I would say, that we need to calculate on it.

I think the 7.2 is really, really important for us besides the financials and what have you because we fundamentally in our company feel this is being unfairly treated, that people have forgotten about dose mechanisms of medications and that you actually dose a product higher, you get more out of it. We just stopped at 2.4. Then, of course, our hope is that people will make the judgment that now that the weight loss magnitude is on par, should I care about the kidney and the heart and the liver that one asset has proven and the other one not yet? And slowly change that.

But the preference share, I think you, you know the data as good as I, in the US is anywhere between, you know, from 10 patients, 7 or 8 go to my competitor. And, basically, 2 on a good day, 3 comes to me. That we do I strongly believe we're going to try to change that. But it will not overnight become, you know, 50/50. We have to do this properly. We have to kind of tell people and then let the people tell each other. And that's why I think there's a bit of a delay on it. We share our plans with you. But there is, unfortunately, a bit of a wait and trust me later element into this for no better reason than what I'm explaining.

Martin Holst Lange (Chief Scientific Officer)

Sachin?

Sachin Jain (European Healthcare Equity Research)

Sachin Jain, Bank of America. Two questions, please. If I go back on pricing, it's more of a midterm question, how you think about price elasticity, so price for volume, midterm. So you've obviously taken it down to $150. It's unlocked the market. How do you think about $150 being a floor, and what work have you done to, say, going to $7,500, unlocking volume? And then how do you think about, as you see data through this year as to whether they titrate up in dose or not, your willingness to lower the higher dose oral, $299, and even the injectable $349, given you're seeing this demand at the lower price? Just trying to get a sense of, we've had a big price reset. How do I think about that from here? And then the second question is, for you, Karsten, on margins.

Obviously, you're guiding to flat margins despite aggressive top lines. Just if you could give us some moving parts as to where the savings are coming given the big investment we're obviously talking about in SG&A? Thank you.

Mike Doustdar (CEO)

Yep. So, Sachin, I hope you don't wish that, you know, in a large forum like this with the broadcast also happening, I will give you my whole list of pricing, you know, policy for what do you call it? For the products. I'll give you one part of the answer, which might resonate well with you. Price is an important element of how much volume gets untangled in this business, no doubt about it. We first saw that with the compounders. The reason, basically, people were picking up a compounding knockoff product was not because they don't want the original. It's because they couldn't afford the original. And we saw how much and how fast, you know, they have been able to penetrate. So that was, I think, one, of course, learning element for us.

But if you just compare the launch of the Wegovy pill to previous launches where the price levels were very different, and you can dig out the prices and actually see the numbers, the 170,000 patients that I spoke to or the 50,000 NBRxs, you know, that I'm speaking to, if you take a look at that, that's 15 times more than the first month of Wegovy injectable launch at the higher, of course, much higher price than it was. And still, you can see this is a better business case at $149 and 15 times more than Wegovy was. You could also come back a little bit closer. Wegovy was, you know, the first launch. You can come closer to the Zepbound launch. And they did actually better than Wegovy, considerably better.

This launch is two times better than the first month of Zepbound launch. So part of it, of course, is the molecule and efficacy and what have you. But, you know, if it was purely efficacy, people will not go to the compounders. If it was purely efficacy, people will not move and, you know, people will still buy Mounjaro because it has higher than 16.6. So price is a big element of all of this as well. And we believe with what we have announced that it's worth the short-term pain because the volumes were easily bypassed. You know, I, again, I have publicized and you know the math better than anyone else that you have to price double the volume, you break even.

If I didn't think that you have to price and you do much, much better than doubling the volume, we would not go in this direction. The reason we do is because we strongly believe that there, and Karsten will now talk to the margin. They strongly believe that there is good business in doing that. But we have also said that we have to see this as an investment that we make short-term, the price reduction, because medium-term, basically, all of this will pan out with the volume increases. And then the question is, when is medium-term starting? Medium-term started 1st of January this year with the pill.

It comes week by week by week because all the scripts that I need in doubling, tripling, quadrupling the volumes will not come on the first day that the price goes down. The question is also, you know, is the margin okay, and do we make money off of this and what have you?

Karsten Munk Knudsen (CFO)

Yep. Thanks, Mike. So on margin and resourcing, then you're right, Sachin, that when you have a top-line decline, which is price-driven, that's brutal on a margin in a high-margin business. So logically speaking or intuitively, operating profit should be declining much faster than top-line. The simple version of why that's not the case is, first of all, we have a couple of more discretionary items that we have restructuring costs in 2025 that makes for an easier comparator, which are partially being offset by Akero running costs in 2026. But it's still a net benefit in this equation on OP developments. And the second piece is super-disciplined resourcing. So we have been cutting a number of budgets across the company, but it's not like a green harvester.

So we are stepping up budgets for our top priorities, for instance, in R&D, so DMA's program and some of the key R&D priorities. But in many departments, we're running with lower budgets this year than we did last year. So financial discipline combined with these two discretionary factors.

Martin Holst Lange (Chief Scientific Officer)

Rajesh?

Rajesh Kumar (Senior Global Healthcare Analyst)

Thank you. Rajesh Kumar from HSBC. Just clarification on that margin point. And this is not my question because you're talking and you, obviously, you put in a lot of capacity that goes into capex assets in the construction. That depreciation is kicking in. So that's fixed cost, which is going up. And, you have done a bunch of headcount reduction. You're telling budgets are coming down. So if the pricing, say, commercial channel pricing next year steps down and has a similar effect as this year and generics suppose Sandoz delays and comes next year, would that still be true for 2027? I know you're not giving a 2027 guidance. Just mechanistically, would be helpful to think through. The question I have is a simple one. Thank you very much for explaining how the guidance is constructed, what is the process.

I'm pretty sure you would have figured out, Karsten, and, you know, knowing you a week before where the guidance would be. So, why was it released a night before? What was the process that you went through that you could not release it when you knew that you were going to be significantly below consensus?

Karsten Munk Knudsen (CFO)

Yep. Two questions from me. So, the first question: correct, the math is if prices go down, it hurts on the margin. Everything else equal. But when you run a business, then everything is not equal. So, of course, the triggers to offsets, logically, we will also have with CapEx coming down, the CapEx flow through into the P&L that we've seen in prior years. So with lower absolute CapEx, we would have a benefit there. And then, of course, we'll be very rational around how we resource the company. It's important to note that it's not we don't start with the margin, and then we gear everything from there.

We start with our top priorities in terms of driving top-line and then the execution across the value chain, including R&D, to create value for our shareholders, both short, medium, and long-term. So that's the first question. For the second question around release of timing, what we're looking at, and it's something that we diligently spend a lot of time on. And there are many scenarios in terms of exactly how the year is gonna pan out. So we worked with a number of scenarios, and a number of assumptions and then also getting the latest data in terms of January performance, both on the oral but also on our other major brands and how we start the year in international operations.

So, getting more data on, agreeing on assumptions. And then the reason we came the night before was that then it's our board of directors that approves our guidance based on a very comprehensive walkthrough. And then since we are materially away from expectations in the market, we have to go out immediately. So then we cannot wait for the next morning as is customary and which we would have done if we were closer to consensus. So that's why we came out after the board. And we had a very thorough assessment around when is the right point in time, when we have enough evidence and a sufficient understanding of scenarios to decide on exactly where we put our guidance and the associated ranges.

Mike Doustdar (CEO)

Can I cut in?

Martin Holst Lange (Chief Scientific Officer)

This was not a month.

Mike Doustdar (CEO)

Sorry?

Martin Holst Lange (Chief Scientific Officer)

This time, it was not a month before we achieved.

Mike Doustdar (CEO)

No, no, no. Can I cut in? Can I actually try to,

Martin Holst Lange (Chief Scientific Officer)

Yes.

Mike Doustdar (CEO)

Articulate that what happened last year to us was a great learning that this obesity market is more dynamic than at least we had felt or known. So typically, all the budget formations and you know, the budget approvals that happens internally between me and my direct reports, actually, at the end of last year was moved to this year, was moved this year. And the reason was we actually it's moving, and it's changing so much. And a small little change on the level of business that we have is, you know, considerable. So we have had a lot of dialogue during the month of January, both with Amie, who heads international operations, and Dave in understanding exactly what is happening, not least with regards to the LOE.

These news are going in and out on a daily basis, frankly speaking, leading into what Carson said the night before, or the same day, actually, that we made the announcement. Once we've kind of figured out, "Okay. This is where we feel comfortable about it, that this is where we feel is the latest information, and now we have to soon go to the market," we've had our board meeting where then we the board actually listens to our pluses and the minuses. They also understands the elasticity of all of this. Then they sign off on, you know, the numbers that you have basically, you know, being communicated.

Speaker 13

Because the worldview you have wasn't really completely different, right, at the moment if you look at how they're looking at the world. So I'm assuming there was one view which was closer to what Lilly is saying, one is what you came out with, or not?

Karsten Munk Knudsen (CFO)

The growth rates are different. The growth rates are different because our dynamics are right now different. They have a situation where they have a lot of tailwind with regards to the preference of their injectable. This is, to a large extent, you know, what's happening with this injectable market. And by the way, when I talked about seven to eight, well, if you choose seven or eight, it makes a big difference, you know, that they take versus the one, you know, two or three that I take. These are, you know, big differences. I think what is really happening is that we on top in, in terms of prices, the world dynamic is not so much different. You know, we will not, as Carson said, go into the details of the pricing like our colleagues are going into.

I would say that, you know, prices, MFN, those are public information, and it's not that they're night and day different. What is really different is the volume uptake.

Speaker 12

Yep.

Karsten Munk Knudsen (CFO)

That we had a huge volume uptake in 2024. We had substantially less of that in 2025 versus Lilly. And then 2026 is, you know, a bit of a question mark. So come back to 7.2 we talked about. I tell you why I feel a patient should go on a Semaglutide 7.2 mg. But do I know today if it's going to be five or four or three on a given Monday? I don't. We have to have our dialogues and discussions and then put the needle somewhere and hold hands on it.

Martin Holst Lange (Chief Scientific Officer)

James?

James Gordon (Director, Head of European Pharma and Biotech & Life Sciences Equity Research)

Thank you. James Gordon from Barclays. Two questions, please. One is on the oral Wegovy launch, really a key highlight. But what's the duration of the opportunity? 'Cause I think in the annual report, the European patent is 31, U.S. 32. But is that like a work in progress, or is it just a five-year opportunity, or do you think you're gonna get much longer IP on it, or is it the same LOE that you're already gonna have a problem with? And then the other question was just M&A. I've heard comments about doing or willingness to do a big obesity deal. But do you how do you balance that with maybe doing something that diversifies you? Because it seems like obesity is where every big pharma company is trying to buy something. And so assets look quite expensive.

How do you think about maybe we don't get in a bidding war with other people versus, like, a diversification?

Mike Doustdar (CEO)

Yep. You'll get the first question. I'll answer the second.

Karsten Munk Knudsen (CFO)

Yep. So on LOE, compound LOE is the same, whether it's oral or injectable. The difference is formulation IP, where the tablet formulation yields longer IP. So with the Wegovy pill we just launched, starting with 1.5 mg, there we have longer IP, you know, into the late 30s. And I think on this one, the formulation actually really matters because you could take, let's say if someone tomorrow makes the compounded semaglutide tablet,

Speaker 13

Come on. Come on. It was just $49.

Karsten Munk Knudsen (CFO)

Was it?

Martin Holst Lange (Chief Scientific Officer)

Sorry?

Speaker 12

$49.

Mike Doustdar (CEO)

$49. For $49. So you're wasting $49, in my opinion, because if you swallow, you know, my injection, either in a liquid format or a pill format, your gut enzyme will basically get rid of it, and it will not get to your bloodstream. I have no idea what they have done with the compound. I have to read, you know, what they're doing. But assuming you just take the compound without the things around it and formulations and what have you, then this just doesn't work. It just simply doesn't work. So it's a little bit different than the injection. Well, the second question on the overall BD and how do we see this with the obesity?

And I think you're a little bit trying to say should we not diversify more into other areas rather than stick with your diabetes and obesities? I think you need to look at obesity as a diversified, basically, therapy area. We call it obesity, but it's many multiple diseases, and it will be segmented with different products at different price points. And it's not that the whole market will deflate when you're thinking broader. And, and let me give you a couple of examples. Think about, Semaglutide, which will go LOE, as you mentioned. When it goes LOE, I foresee that it's gonna be low priced, very low price, and, and it will become standard of care in, in, in, in multiple of markets at an affordable, high-volume price.

Think about obesity in the context of an obese patient who has fatty liver at the latest stage of F4, and they have to change their liver, liver transplant. We have in our pipeline a very promising asset called efruxifermin that we bought from Akero four to five months ago. And that gives us actually that flexibility because if you think about the price of a liver transplant in this country, my assumption is about GBP 200,000, something like that. So I'm assuming we're not gonna price efruxifermin at semaglutide price but at whatever, you know, where we see the alternative is and what have you. They're both obese patients, very different segment. And I think actually many people out there are right now looking at this whole area as that maybe Lilly, certainly us.

Everyone else is after a single agonist in GLP-1 because it has become quite attractive. And then everyone wants, you know, the highest dose of weight loss, and that's fine. You know, so, so people are going after, "Oh, if there's 22%, let's go for 23% or 24%." But the market's gonna be very different, very, very different in segmentation.

Martin Holst Lange (Chief Scientific Officer)

Evan?

Speaker 13

Thank you.

Evan Seigerman (Managing Director, Head of Healthcare Research, Senior Biotechnology and Pharmaceutical Analyst)

Hi there. Evan Seigerman from BMO Capital Markets. So following up to your comments on, you know, diversification and the segmentation, how do you ensure that the obesity market isn't a race to the bottom, Mike? We're all commenting on the Hims & Hers announcement. I hear what you're saying about, you know, their compounded, you know, their compounded pill. But how do you ensure that this becomes a market where you can segment and price appropriately? And secondarily, on that, should you be leaning more into rare disease and maybe even adjacencies to obesity, you know, to help expand kind of your footprint in cardiometabolic?

Mike Doustdar (CEO)

Yep. Maybe Martin, you wanna take that.

Martin Holst Lange (Chief Scientific Officer)

Yeah. Absolutely. So, I think it's very clear that there is a clear consumer space in obesity. A lot of patients, but maybe also a very clear focus on just the weight loss, maybe down the road also on better tolerability. Those volumes we'll all compete for. But a little bit to your point, we also see a segmentation of the space where we see subpopulations with very high weight loss needs, so morbid obesity or comorbidities that require something specific. That's maybe not 100 million obese patients. Maybe that's 10 million patients. It's still substantial. But there we can, to Mike's point, talk about higher volume. So, if again, if you think about MASH and obesity, that would be a space where it's not just about the weight loss.

If you think about cardiovascular disease and diabetes where we are also addressing that not only with GLP-1s but also with anti-inflammation and more specific drugs, think about the metabolic disease but also the comorbidities, then you get a space where there is high volume and maybe lower prices. But there's also a space where there is higher value, and maybe lower volume. And in that space, you can continuously develop both monotherapies but also we develop true innovation, in terms of new targets. I'm not sure I,

Evan Seigerman (Managing Director, Head of Healthcare Research, Senior Biotechnology and Pharmaceutical Analyst)

So, you know, but, you know, in an environment where pricing is so pressured, how are you gonna convince a payer to give someone a high price if they're morbidly obese without having to step through kind of semaglutide/hydrosemaglutide? How do you get them there? And how do you convince the value for something like MASH? Because everyone likes the weight loss drugs 'cause they feel better. If you have fatty liver disease, it's not a problem until your doctor says it is.

Martin Holst Lange (Chief Scientific Officer)

No. I think that's right. I mean, if you think about MASH, a lot of patients who are obese have fatty liver. But not a lot of patients who are obese and have fatty liver also have cardiovascular disease. And please remember in F2 and F3, the most prevalent reason for both morbidity and mortality is not the liver disease. It's actually cardiovascular disease. And when you move into F4, that becomes even more acute. So you have cardiovascular disease, but now you also die, and you feel seriously your liver disease. And in that space, talking about a 10% weight loss or a 15% weight loss doesn't really make a lot of sense because it's a different patient need.

From a societal, from a payer perspective, our job is then to show the return of investment in treating those diseases where they are. So it's a fundamentally different approach than going for the weight loss and the big one, volumes. But with our both, scientific development but also commercial expertise in those spaces, we can actually leverage that. But it's very much about a dialogue, talking to payers of where do they see the unmet need, and where is their willingness to pay.

Karsten Munk Knudsen (CFO)

I think there's two elements that you need to consider. One, who you're competing with and what's your competitor's price. I use the Efruxifermin as an example that if my competitor is not Lilly but liver transplant, then I price it according to that. And then people can figure out what they want. These people have to get a liver transplant, or they die. Or they can go on Efruxifermin, basically, possibly avoid that, right? So that's, I think, one thing you need to kinda consider.

I also agree with you that, of course, if there's five competitors in exactly the same segment, then it's difficult to probably come and say, "I am 10 times more." But I also feel when we think about consumerism, you need to realize there is something around the perception that is created that takes people for a certain either brand name or the next best thing and what have you, that we have not seen so much of it in the medicine world. And we started to see that in obesity much, much more. Why is it that, you know, people are still picking up a compounded product, if, basically, you know, price was not important? We could also say the opposite. If the price is everything, why the heck is Lilly and I still selling?

Because they also kinda apparently make people lose weight, right? And even if you kinda take two of their products, jab it twice, then you probably get to the same level. I mean, it's my guess. I don't know. I haven't done it. But why is Mounjaro still selling? And then they showed, you know, they're gonna be, what, $40 billion this year and what have you. So there must be something more than the simplistic way that you just a little bit articulated it. It is more of it. The trick, I think, and the winner of this race will be based on a couple of things. One, can you scale?

Can you, because you're thinking when segments work well when each segment is not a tiny one but that there are actually enough people in these segments to do something and what have you. And then to do that, I think many people can have a niche business in this, but can you actually have a decent business in each of these segments to make something meaningful? So scaling is really important. And I only see one other company besides us that's right now thinking about that. And then the second is the breadth of the portfolio. Can you have simply different product presentation and form factors that show something is different than when you come and ask for, you know, the certain products?

We have seen, you know, we have learned that, you know, from our competitor, that when you have one product in one form factor, you're much more restricted on how you can sell it in different channels, and the price is different. We have seen my competitor that they take the same product in different form factors, and they actually do well with it here and maybe less so on this segment at different price points. So it is really about thinking about this as a long-term business like we have done with our diabetes than just coming in and making some fast and quick money. And speaking of the diabetes, you know, insulin just as a proxy, we have half of the world's insulin today.

We do it with 11, 12 different types of insulin, not because those insulins are phenomenally different from each other but because they've marketed to different groups of people at different price points and different presentations and what have you. And the cheapest insulin I have, which is, you know, sold in rural part of India, is something called the 40 IU, 100 IU human insulin. And the most expensive one I have is the weekly, you know, called Awiqli, sold in three other markets. The patient pickup price difference between one versus the other, I think, is 30 times, if I'm not mistaken. They both reduce your HbA1c pretty much the same. So you can look at it from an element of what's the problem with the diabetic insulin. You have high glucose. You have to bring the HbA1c to 6.5-7.

They both can do the same, but they do it from a different angle.

Moderator (participant)

Very last question, very quick, Simon.

Simon Baker (Head of Global Biopharma Research)

Thank you. Simon Baker from Redburn Atlantic. Mike, you said yesterday that from the early launch of the, the pill, most patients are new to therapy. Is, is that in line with your expectation? Because that, that surprised quite a few people yesterday because the expectation was that the orals would effectively serve as a maintenance market rather than an induction. So does that suggest that people are going on this not so much because it's a pill but because it's the cheapest option? And what does that mean for the.

Mike Doustdar (CEO)

Yeah.

Simon Baker (Head of Global Biopharma Research)

The market opportunity? And then just kinda related to that, if we go back to Matt's question at the beginning about guidance, if we look at what you were saying and what Lilly was saying yesterday, in terms of the threats and headwinds, you're kind of on the same page, but there's a big, big difference in your sight of the opportunity versus theirs. So would it be fair to say that the guidance is effectively reflecting the different levels of confidence? You know exactly what the price environment is, but you don't know what the volume uplift is. And that's why the guidance is where it is.

Mike Doustdar (CEO)

Yep. So let me touch the pill question first. You can touch upon the guidance, and then maybe I can add to it afterwards. Pretty much 100%. So today or yesterday, I said 88% of the pills I have sold, I've sold the lowest dose, 1.5 milligram. That's how I can say that they're new patients because I kinda feel I haven't asked people, "Are you new or old?" I look at the data. I'm selling the lowest dose, 1.5, 88%, you know, of the time. And then I say, "Probably they're new." I'm pretty sure six months from now, it will be a different split. The exact split, I don't know.

The reason is I feel like the ones that started 1st of January eventually titrate and go higher and higher. They don't stay on it to a large extent because they wanna get the effective 16.6% weight loss. Some people might stay on the 1.5 because they want microdosing and, you know, longevity and everything else that's happening on the internet about it. So maybe there's some of that. And, of course, the new ones probably always go to the 1.5. There could also be a group of people that move slowly from the injection to maintain themselves. Lilly is very much speaking to that that they're gonna push that. And as they do, maybe we get some benefit out of that or not at the lower dose, but much longer stay time.

So the patient cost or patient acquisition cost is to—sorry, patient stay time co benefits will be useful to see. I think that for a period of time, Simon, there's a lot of people out there that want to lose weight but don't wanna get an injection. The taboo of injection, I think, will play to our benefit. So I still feel that, you know, at least short term, let's say 2026, we will probably see this really is a market expander. While we will monitor and share with you as we learn the rest on the guidance.

Karsten Munk Knudsen (CFO)

Yeah. Thanks for that question, Simon. And I would say when we did our guidance and our budget modeling for the year, it's not lack of confidence in our product. So we are super confident vis-à-vis competition with the Wegovy pill. We all remember 17% versus 12% on efficacy in terms of weight loss, cross-trial also, indications of better tolerability. So we are very confident on the competitiveness of our product and, by the way, the first mover advantage that we all know about. So that's our starting point. Exactly how Lilly did their modeling, I have no clue, and I shouldn't have. So but there are a lot of assumptions for any product launch, you know, how that's gonna pan out. And in obesity, it's even more uncertain and stands on a lot of assumptions.

So what's the channel mix between cash and reimbursed? What's, you know, the sourcing? What's the cannibalization, etc., etc.? So we put our best brains into it, and but it caters to a lot of uncertainties. And we put our best assumptions in, and I'm sure they did the same. And then a year from now, we'll see who got closest to the reality. So that's as much as I can say. But full confidence in the Wegovy pill.

James Quigley (Pharma Analyst)

Great. Those words. Back to you, Mike, if you have any concluding remarks.

Mike Doustdar (CEO)

Yeah. So thanks very much for being here. And our hope, of course, is to, in a transparent way, explain what goes underneath the numbers and what we have done. I will reiterate, of course, that the reason we don't have some of these answers in terms of the magnitude of what can go really good and what can go really bad and when will the volumes, you know, triple and quadruple is simply because we are in a therapy area that's just a lot more dynamic than most others you have seen. Most of the medication today are for serious diseases that are not as much consumer-driven and moved to the left or right based off social media talk. This one is.

And we're learning it faster than anyone else, how to read those social media talks and how to make better forecasts. But it's never going to be as predictable as the insulin business for us or I think also for our competitor. And they have right now a bit of a tailwind, and we have a bit of a headwind against us. But I also remind investors that have been long-term with us that we have competed with Lilly for more than 100 years. And you can ask them. We have won many of the battles, and they have won some also. And we both have not declared the war winner yet. And it's our job to, of course, you know, continue this. We find them a very worthy competitor. They make us better.

But I also think that they also say that we have taught them a lot of things as well. So we will continue. And I think when you come to our, hopefully, Capital Markets Day on the 21st of September here in London, we will show you how we have not given up on the fight, be it on the injectable front, on the back of what I explained, or the pill. We will also show you that by our focus strategy, we are now able to innovate within diabetes and obesity faster than any of you would have imagined. And we will basically, you know, showcase some of the things that we know on earlier pipelines and assets and the speed that I've been talking to.

And hopefully, Karsten will also say to you that we continue to be incredibly financially disciplined that I think we are as a company, always been, to make sure that we don't basically save a single dime on investments where it's needed but save every single dime where we don't need it. And we will do our utmost to remain very confident we will not run into manufacturing issues again on the back of the problems we've had in the past. So stay tuned, and hopefully, we will tell that story to you on September.