Danish pharmaceutical giant Novo Nordisk reported better-than-expected earnings for 2023 on Wednesday, fueled by surging global demand for its blockbuster diabetes and obesity medications.
The maker of Ozempic and Wegovy said total sales jumped 31% in Danish kroner and 36% in constant exchange rates to 232.3 billion kroner ($33.71 billion). Operating profit soared 37% in kroner and 44% at CER to 102.6 billion kroner.
Novo Nordisk expects robust growth to continue in 2024, guiding for sales expansion of 18% to 26% in constant currencies.
| DKK million | 2019 | 2020 | 2021 | 2022 | 2023 | 2022-23 Change |
|---|---|---|---|---|---|---|
| Financial performance | ||||||
| Net sales | 122,021 | 126,946 | 140,800 | 176,954 | 232,261 | 31% |
| Sales growth as reported | 9.1% | 4.0% | 10.9% | 25.7% | 31.3% | |
| Sales growth in constant exchange rates1 | 5.6% | 6.7% | 13.8% | 16.4% | 35.6% | |
| Operating profit | 52,483 | 54,126 | 58,644 | 74,809 | 102,574 | 37% |
| Operating profit growth as reported | 11.1% | 3.1% | 8.3% | 27.6% | 37.1% | |
| Operating profit growth in constant exchange rates1 | 5.6% | 6.8% | 12.7% | 14.6% | 43.7% | |
| Depreciation, amortisation and impairment losses | 5,661 | 5,753 | 6,025 | 7,362 | 9,413 | 28% |
| EBITDA1,2,3 | 58,144 | 59,879 | 64,669 | 82,171 | 111,987 | 36% |
| Net financials | (3,930) | (996) | 436 | (5,747) | 2,100 | |
| Profit before income taxes | 48,553 | 53,130 | 59,080 | 69,062 | 104,674 | 52% |
| Effective tax rate3 | 19.8% | 20.7% | 19.2% | 19.6% | 20.1% | |
| Net profit | 38,951 | 42,138 | 47,757 | 55,525 | 83,683 | 51% |
| Purchase of property, plant and equipment3 | 8,932 | 5,825 | 6,335 | 12,146 | 25,806 | 112% |
| Purchase of intangible assets3 | 2,299 | 16,256 | 1,050 | 2,607 | 13,090 | 402% |
| Cash used for acquisition of businesses | — | — | 18,283 | 7,075 | — | |
| Free cash flow1 | 34,451 | 28,565 | 29,319 | 57,362 | 68,326 | 19% |
| Total assets | 125,612 | 144,922 | 194,508 | 241,257 | 314,486 | 30% |
| Equity | 57,593 | 63,325 | 70,746 | 83,486 | 106,561 | 28% |
The standout performance sent Novo Nordisk shares to an all-time high above 2,800 kroner, pushing the company’s market valuation north of $500 billion. The stock was up 1.6% on the day by late morning trading in Copenhagen.
Driving the record results was Novo Nordisk’s diabetes and obesity care unit. Sales in the division grew 28% in kroner and 34% at CER to 177.7 billion kroner.
Within that business, the company’s anti-obesity medications saw astronomical growth of 154% at CER to 41.6 billion kroner. This was powered by its semaglutide-based injections Wegovy for weight management and Ozempic for blood sugar control.
| DKK million | 2019 | 2020 | 2021 | 2022 | 2023 | 2022-23 Change |
|---|---|---|---|---|---|---|
| Financial ratios | ||||||
| Gross margin3 | 83.5% | 83.5% | 83.2% | 83.9% | 84.6% | |
| Sales and distribution costs in percentage of sales | 26.1% | 25.9% | 26.3% | 26.1% | 24.4% | |
| Research and development costs in percentage of sales | 11.7% | 12.2% | 12.6% | 13.6% | 14.0% | |
| Operating margin3 | 43.0% | 42.6% | 41.7% | 42.3% | 44.2% | |
| Net profit margin3 | 31.9% | 33.2% | 33.9% | 31.4% | 36.0% | |
| Cash to earnings1 | 88.4% | 67.8% | 61.4% | 103.3% | 81.6% | |
| Return on invested capital1 | 98.0% | 82.8% | 69.0% | 73.6% | 88.5% | |
| Share performance and capital allocation | ||||||
| Basic earnings per share/ADR in DKK3,5 | 8.21 | 9.03 | 10.40 | 12.26 | 18.67 | 52% |
| Diluted earnings per share/ADR in DKK3,5 | 8.19 | 9.01 | 10.37 | 12.22 | 18.62 | 52% |
| Total number of shares (million), end of year3,5 | 4,800 | 4,700 | 4,620 | 4,560 | 4,510 | (1%) |
| Dividend per share in DKK3,4,5 | 4.18 | 4.55 | 5.20 | 6.20 | 9.40 | 52% |
| Total dividend (DKK million)4 | 19,651 | 21,066 | 23,711 | 27,950 | 41,987 | 50% |
| Dividend payout ratio3,5 | 50.5% | 50.0% | 49.6% | 50.3% | 50.2% | |
| Share repurchases (DKK million) | 15,334 | 16,855 | 19,447 | 24,086 | 29,924 | 24% |
| Closing share price (DKK)3,5 | 194 | 214 | 368 | 469 | 698 | 49% |
“The unmet needs in type 2 diabetes and obesity are growing rapidly, fueling demand for our GLP-1 therapies worldwide,” said Novo Nordisk’s chairman and CEO. “This has enabled us to reach more patients than ever, contributing to substantial sales growth.”
Indeed, demand has outstripped supply for Wegovy and Ozempic. Novo Nordisk cited “periodic constraints” across its portfolio in 2022 as production struggled to keep pace. In response, the company is invested 75 billion kroner to significantly expand manufacturing capacity.
Novo Nordisk also noted it has started to gradually increase supply of lower dosage Wegovy in the US after months of shortages. Rationing the drug’s availability has led to long waiting lists for patients eager to try the new anti-obesity medication.
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With obesity and diabetes rates continuing to climb globally, Novo Nordisk looks poised for many years of continued growth as it rolls out its new generation of highly effective GLP-1 drugs.
The company’s performance has been so stellar that its market cap now exceeds other pharmaceutical titans like Pfizer and Roche. Novo Nordisk is cementing its position as a dominant force in diabetes and obesity treatment.
Despite high prices for its drugs, demand remains incredibly robust. In a world plagued by rising rates of metabolic disorders, Novo Nordisk’s breakthrough medications are proving vitally needed.
While supply chain investments will pressure profit margins in the near-term, the long-range outlook appears bright. Novo Nordisk has both the financial resources and market leadership to solidify its status as a pharmaceutical growth juggernaut.