Novo Nordisk (NVO) Q1 2025: Strong 18% Growth as GLP-1 Compounding Clouds U.S. Outlook
Novo Nordisk delivered 18% sales growth in Q1 2025, fueled by continued global demand for its GLP-1-based diabetes and obesity treatments. However, the company lowered its full-year outlook due to the rapid rise of compounded GLP-1s in the U.S., which is impacting branded prescription uptake. Management is leaning on new access initiatives, expanded capacity, and upcoming product launches to recapture momentum as regulatory and competitive pressures intensify.
Summary
- GLP-1 Volume Disruption: U.S. compounded GLP-1s significantly pressured branded sales, forcing a lower full-year outlook despite 18% constant currency sales growth.
- Obesity Franchise Expansion: Vigorous international growth and new launches for Wegovy, with 137% obesity care sales growth outside the U.S., offsetting some U.S. headwinds.
- Commercial Tactics Intensify: Direct-to-patient cash offers, telehealth partnerships, and CVS formulary exclusivity deployed to transition patients from compounded to branded GLP-1s.
- Pipeline and Capacity Scaling: Next-generation obesity treatments and oral semaglutide filings position Novo Nordisk for future growth, with heavy investment in manufacturing expansion.
Performance Analysis
Novo Nordisk reported Q1 2025 sales growth of 18% at constant exchange rates, with operating profit up 20%. U.S. operations grew 17%, while international operations rose 19%, reflecting broad-based demand for GLP-1-based (glucagon-like peptide-1, a class of drugs for diabetes and obesity) therapies. Obesity care was the standout, with global sales up 65% and international obesity sales surging 137%, driven by Wegovy launches in new markets.
The diabetes segment also posted solid performance, with GLP-1 diabetes sales up 11% overall. However, U.S. branded GLP-1 growth was constrained by rapid expansion of compounded alternatives, especially after the FDA removed semaglutide from the drug shortage list. Gross margin slipped slightly due to increased depreciation and capacity expansion costs, but was partially offset by favorable product mix. Free cash flow improved to DKK 9.5 billion, up from DKK 5 billion a year ago, despite stepped-up capital expenditure for manufacturing scale-up.
- Obesity Market Outpaces Diabetes: International obesity care sales now represent a major growth lever, with Wegovy driving nearly 400% growth in some regions.
- U.S. Compounding Headwind: Over 1 million U.S. patients are estimated on compounded GLP-1s, materially impacting branded prescription trends and guidance.
- Margin Dynamics: Capacity investments and product mix shifts are compressing gross margin, but higher-margin GLP-1 uptake is a partial offset.
The company’s ability to transition patients from compounded to branded GLP-1s in the U.S. is now the pivotal performance driver for 2025.
Executive Commentary
"We have reduced our full year outlook due to lower than planned branded GLP-1 penetration, impacted by the rapid expansion of compounding in the US. Novo Nordisk is actively focused on preventing unlawful compounding, as well as the efforts to expand patient access on our GLP-1 treatments."
Lars Brorgaard Jørgensen, CEO
"The acceleration to deliver our guidance is mainly in the second half of the year when we talk about US, while in international operations we will see a continuous step up over the coming quarters in terms of sales growth."
Carsten Munchlussen, CFO
"We expand the cash offering. The $499 via NovoCare Pharmacy was purposeful and planned at the time when compounding would start to diminish as well as the collaborations with telehealth companies. And soon that cash offering will be available in all 9,000 CVS stores."
Dave Moore, EVP US Operations
Strategic Positioning
1. U.S. Compounding Disruption and Tactics
The rapid expansion of compounded GLP-1s in the U.S. has become a structural headwind, with management estimating more than 1 million patients using non-branded alternatives. Novo Nordisk is deploying a multi-pronged response: legal efforts against unlawful compounding, partnerships with telehealth providers to channel patients to branded Wegovy, and a direct-to-patient cash offer priced at $499 per month. The recent CVS formulary decision to cover Wegovy exclusively for obesity is a critical commercial win, but management stressed that this was not pursued through exclusivity payments—signaling payer confidence in the product’s clinical profile.
2. International Obesity Leadership
International operations are now the engine of obesity franchise growth, with Wegovy launched in over 25 countries and international GLP-1 market share exceeding 72%. Expanded supply and promotional activity are unlocking pent-up demand, with management targeting additional launches and continued market share gains as supply constraints ease.
3. Pipeline and Next-Generation Therapies
R&D execution remains robust, highlighted by the completion of pivotal trials for Cagrisema (next-generation obesity therapy) and the regulatory submission of oral semaglutide 25mg as the first oral GLP-1 for obesity in the U.S. If approved, this would expand Novo Nordisk’s addressable market to patients preferring oral over injectable therapies—a segment management expects will be smaller but strategically important.
4. Manufacturing Scale and Capital Allocation
Manufacturing expansion is a top priority, with capital expenditure rising to DKK 13.4 billion in Q1 as the company builds out U.S. and global capacity for both injectable and oral GLP-1s. Free cash flow improvement and a pause in share buybacks reflect a deliberate shift to reinvestment over capital returns, with board authorization for buybacks retained for future flexibility.
5. Regulatory and Payer Landscape
Regulatory and payer dynamics remain fluid, with U.S. drug pricing negotiations (IRA) and potential tariffs representing ongoing uncertainties. Management believes its payer exposure is manageable, with most government channels already at lower price points, but acknowledges political risk remains a watchpoint for 2025-2027.
Key Considerations
This quarter marks a strategic inflection point for Novo Nordisk, as U.S. compounding disrupts the GLP-1 market and forces a rapid evolution in commercial strategy. Investors should weigh the following:
- Patient Transition Execution: The success of cash offers, telehealth partnerships, and CVS exclusivity in converting compounded GLP-1 users to branded prescriptions will determine U.S. growth in the second half.
- International Rollout Pace: Accelerated Wegovy launches and supply normalization are unlocking high-margin growth outside the U.S., offsetting some domestic headwinds.
- Pipeline Readouts: Upcoming Cagrisema and oral semaglutide milestones, as well as MASH (metabolic dysfunction-associated steatohepatitis) label expansion, could further widen the addressable market.
- Margin and Cash Flow Management: Heavy investment in capacity is necessary to meet demand, but gross margin and free cash flow trends will be critical as pricing and payer dynamics evolve.
- Competitive and Regulatory Risks: U.S. pricing pressure, IRA negotiations, and potential tariffs, as well as competition from Eli Lilly’s tirzepatide (Mounjaro), remain key external variables.
Risks
U.S. compounding remains the single largest risk, with patient migration dynamics still uncertain and compounded GLP-1 price points undercutting branded offerings. Regulatory enforcement and payer decisions could swing market share rapidly. Additionally, potential U.S. drug pricing reforms and tariffs could pressure margins, while aggressive capacity expansion increases operating leverage and execution risk.
Forward Outlook
For Q2 and the remainder of 2025, Novo Nordisk guided to:
- Full-year sales growth of 13% to 21% at constant exchange rates (down from prior guidance)
- Operating profit growth of 16% to 24% at constant exchange rates
- Free cash flow of DKK 56 to 66 billion, reflecting higher CapEx and moderated sales outlook
Management expects U.S. sales acceleration in the second half as compounded GLP-1 usage declines post-FDA enforcement and as commercial tactics take effect. International operations are expected to deliver steady growth through expanded launches and improved supply.
Takeaways
Novo Nordisk’s Q1 performance underscores the resilience and global demand for GLP-1 therapies, but also exposes new vulnerabilities in the U.S. market from compounded alternatives.
- Obesity Franchise Is Globalizing: International Wegovy launches and market share gains are balancing U.S. volatility, establishing Novo Nordisk as the clear global leader in obesity care.
- Execution on U.S. Patient Capture Is Critical: The ability to transition compounded GLP-1 patients to branded products, especially through new commercial channels, will dictate U.S. performance in the back half of 2025.
- Pipeline and Capacity Set the Stage for Long-Term Growth: Next-generation therapies and manufacturing scale-up are positioning the company for future market expansion, but require disciplined execution and risk management.
Conclusion
Novo Nordisk delivered robust growth in Q1, but the rise of compounded GLP-1s in the U.S. forced a strategic reset and lower guidance for 2025. The company’s ability to execute on patient transitions, international launches, and pipeline milestones will determine whether it can sustain leadership and growth momentum in a rapidly evolving market.
Read-Through
The compounding disruption in the U.S. GLP-1 market is a cautionary signal for all branded pharmaceutical manufacturers in chronic disease categories. As telehealth and compounding channels expand, payers and regulators may accelerate shifts in market access and pricing. Global demand for effective obesity and metabolic treatments remains robust, but the pathway to monetizing innovation is increasingly complex and requires agile commercial, legal, and supply chain execution. Competitors and adjacent players in diabetes, obesity, and specialty pharma should closely watch how Novo Nordisk navigates this inflection point in the U.S. and leverages its international scale.