Down 39%. Is Novo Nordisk Stock a Buy on the Dip?

Novo Nordisk, the Danish multinational pharmaceutical company, has seen its stock price decline by approximately 39% in recent months, raising questions about whether it is a buy on the dip. The company's stock price has been impacted by various factors, including market concerns about its growth prospects, geopolitical risks, regulatory pressures, and competition in the GLP-1 market. However, Novo Nordisk's strong pipeline, diversified product portfolio, and strategic investments in AI-driven drug discovery and new technological platforms may help the company mitigate these risks and maintain its competitive position in the long run.

Novo Nordisk's financial performance in 2024 showed significant growth compared to the previous year. Sales increased by 25% measured in Danish kroner and by 26% at constant exchange rates (CER) to DKK 290,403 million. The company's operating profit also grew within the ranges provided in November 2024. The effective tax rate, capital expenditure, depreciation, amortisation, and impairment losses were all in line with the guidance. However, the free cash flow in 2024 was realised at DKK -14.7 billion, mainly impacted by the USD 11.7 billion acquisition price related to the three Catalent manufacturing sites.

Looking at the therapeutic areas, we can identify the following trends:

1. Diabetes care: Sales in this area increased by 19% measured in Danish kroner and by 20% at CER to DKK 206,618 million. This growth was driven by the expansion of GLP-1-based products and insulins. Novo Nordisk's global diabetes value market share remained unchanged at 33.7%.
* GLP-1-based therapy for type 2 diabetes: Sales of GLP-1-based products for type 2 diabetes (Rybelsus®, Ozempic®, and Victoza®) increased by 21% measured in Danish kroner and by 22% at CER to DKK 149,125 million. The estimated global GLP-1 share of total diabetes prescriptions increased to 6.7% compared with 6.0% 12 months ago. Novo Nordisk is the global market leader in the GLP-1 segment with a 55.1% value market share.
+ Ozempic® sales increased by 26% in both Danish kroner and at CER to DKK 120,342 million, driven by both North America Operations and International Operations.
+ Rybelsus® sales increased by 24% measured in Danish kroner and by 26% at CER to DKK 23,301 million, driven by EMEA and Rest of World.
+ Victoza® sales decreased by 37% measured in Danish kroner and by 36% at CER to DKK 5,482 million, as the GLP-1 diabetes market shifted towards once-weekly treatments.
* Insulin sales: Sales of insulin increased by 15% measured in Danish kroner and by 17% at CER to DKK 55,373 million.
2. Obesity care: Sales of Obesity care products, Wegovy® and Saxenda®, increased by 56% measured in Danish kroner and by 57% at CER to DKK 65,146 million. This growth was driven by both North America Operations and International Operations. The volume growth of the global branded obesity market was 119%. Novo Nordisk is the global market leader with a volume market share of 70.4%.
3. Rare disease: Rare disease sales increased by 9% in both Danish kroner and at CER to DKK 18,639 million.
* Rare endocrine disorders: Sales of Rare endocrine disorder products increased by 30% measured in Danish kroner and by 31% at CER to DKK 4,993 million. Novo Nordisk is working on gradually re-establishing supply of rare endocrine disorder products following a reduction of manufacturing output. Sogroya® has been launched in six countries, and the initial feedback from patients and physicians is encouraging.
* Rare blood disorders: Sales of Rare blood disorder products increased by 3% in both Danish kroner and at CER to DKK 12,138 million, mainly driven by increased haemophilia B sales.

In conclusion, Novo Nordisk's financial performance in 2024 showed significant growth in sales and operating profit, with notable trends in the diabetes care, obesity care, and rare disease therapeutic areas. The company's focus on GLP-1-based products and insulins in diabetes care, as well as its leadership in the obesity care market, contributed to this growth. Additionally, the company's efforts to re-establish supply and launch new products in the rare disease segment have shown promising results. While the company faces challenges such as market concerns about its growth prospects, geopolitical risks, regulatory pressures, and competition in the GLP-1 market, its strong pipeline, diversified product portfolio, and strategic investments in AI-driven drug discovery and new technological platforms may help it maintain its competitive position in the long run. As a result, Novo Nordisk stock may be a buy on the dip for investors seeking exposure to a leading pharmaceutical company with a strong focus on innovation and growth.