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Novo Nordisk faced internal warnings about Wegovy launch

readiness

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Lilly's Zepbound surpasses Wegovy in new prescriptions

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Novo's pricing strategy drew backlash from insurers and

patients

By Jacob Gronholt-Pedersen, Maggie Fick

COPENHAGEN, July 1 (Reuters) - Novo Nordisk's top

executives ignored internal warnings that the company was not

sufficiently prepared for the launch of its weight-loss drug

Wegovy, leaving the Danish drugmaker in a more vulnerable

position when rival Eli Lilly ( LLY ) entered the market, six former

employees involved in the discussions told Reuters.

Novo has enjoyed a tremendous windfall of $46 billion

(292 billion Danish crowns) in net profit since mid-2021, when

Wegovy became the first highly effective obesity treatment

approved in the United States. But Lilly's Zepbound

therapy outstripped Wegovy in weekly new prescriptions this year

and the company struggles to convince investors it can remain

competitive in the weight-loss boom.

In response, Novo is reorganizing its leadership team following

the surprise ouster of Chief Executive Lars Fruergaard

Jorgensen. Other key executives had already stepped down,

including U.S. chief Doug Langa, who, according to two former

employees, had insisted on a commercial launch very soon after

Wegovy's U.S. approval.

The sources spoke to Reuters under the condition of

anonymity to speak frankly about their former employer.

In heated internal discussions, sales and marketing

executives urged Langa to first secure more supply and health

insurance coverage, the two former employees said. Without

robust coverage, many patients could not afford Wegovy's monthly

cost of up to $1,300. Lilly wasn't expected to enter the market

for at least two years and Novo could have been better prepared,

they said.

Langa hewed to guidance from company headquarters in

Copenhagen, which assumed much more modest sales through 2025,

the two sources said. While demand for Wegovy proved to be

unprecedented in a global obesity epidemic, the Novo view was

too conservative based on its own indicators, they said.

"The forecasting was way, way off," said one of the sources.

Sales and marketing executives said at the time "we've got a lot

of research that tells us this is going to take off like crazy.

We need to wait until the pharmacies are stocked and ready to

go. But Doug Langa said ... 'no, we're going to launch.'"

Langa, who continues to work for Novo in an advisory role,

did not reply to a Reuters request for comment.

Details of Novo's internal discussions have not been

previously reported. Jorgensen and other executives such as

Chief Financial Officer Karsten Munk Knudsen have said publicly

they were surprised by the overwhelming demand at Wegovy's

launch.

A Novo spokesperson said the company "utilized available

data and modelling forecasts to predict demand" for Wegovy and

is committed to improving access. The drugmaker has since

secured wider insurance coverage and offered discounts to reduce

out-of-pocket costs.

Soon after launch, Novo faced repeated supply shortages, leaving

patients scrambling to get their next doses and preventing

others from starting treatment. High out-of-pocket costs pushed

many to the compounding market for cheaper copies.

"Novo didn't understand the market they were building and

were so inflexible in their approach," said Evan Seigerman, an

analyst at BMO Capital Markets. At a recent analyst and investor

meeting, "every time someone would bring up something that Lilly

had done that was kind of creative or strategic, (Jorgensen)'s

like, 'Well I don't know if we can do that.'"

'CAPPED' LAUNCHES

Clinical trial data showed in 2018 that Wegovy could help

people lose about 16% of their body weight, a major advance for

the more than 100 million American adults living with obesity.

Other signs suggesting massive demand for Wegovy included

physician feedback and prescribing data for Ozempic, Novo's

diabetes drug that contains the same active ingredient as

Wegovy, four of the former employees said.

Yet Novo stuck by its "strategic aspiration" from late 2019,

that annual obesity sales would double by 2025 due to Wegovy.

The company reported obesity sales of 5.7 billion Danish

crowns ($895 million) in 2019 from Saxenda, a far less effective

weight-loss drug. In 2024, obesity sales had already reached

65.1 billion crowns ($10.2 billion).

"Even though they saw the data, even though they heard all

the feedback from the market, they never reflected it in the

forecasts," said a third source, a former senior manager. "Many

of us said again and again (internally) that this is going to be

huge."

Analysts had also questioned the forecasts when Novo

announced them during a 2019 investor conference.

"You're sitting on the biggest product launch you've ever

done," said Keyur Parekh, at the time a Goldman Sachs

analyst, according to a recording of the meeting. "Why isn't the

board pushing you more towards a higher aspirational target?"

Novo repeated the pattern in other countries, introducing

"volume-capped launches" with minimal supplies. Only Denmark,

its home market, was spared, one of the former employees said.

Novo prioritised supply for high-price markets like Japan

and the United Arab Emirates over key European countries where

doctors influence global prescribing trends, the source said.

Lilly entered with ample supply; it quickly became the

dominant player in parts of Europe and the Middle East, said two

of the former employees.

Novo's spokesperson said the company remains a leader in

obesity treatments, but did not comment on market share

estimates.

PRICING MISSTEP

Novo also drew backlash from insurers, doctors and patients for

launching Wegovy in the U.S. at more than $1,300 per month,

about $350 more than Ozempic. Lilly priced Zepbound at $1,080,

similar to its diabetes drug Mounjaro, which uses the same

active ingredient. The U.S. drugmaker offered steep discounts,

including out-of-pocket prices starting at $349 through its

LillyDirect pharmacy for some uninsured patients.

One of the former employees said Novo was reluctant to offer

meaningful rebates to pharmacy benefit managers (PBMs), who

negotiate on behalf of health insurers and employers.

Lilly entered a market where "payers were frustrated with

the way Novo negotiated the pricing," the employee said. "They

were looking for some relief on the pricing, which Novo wasn't

giving them."

"I felt like during this whole journey, Novo is more

conservative compared to Lilly," said Lukas Leu of Bellevue

Asset Management in Switzerland, citing how Novo entered the

direct-to-consumer pharmacy market later than Lilly. Leu's fund

holds both Novo and Lilly shares. "And Lilly is more bold. Lilly

is just going in there."

($1 = 6.3684 Danish crowns)