Citi has warned that Novo Nordisk (NYSE:NVO) inability to curb the use of compounded semaglutide may weigh on investor sentiment, despite the strength of its obesity drug portfolio.
In a note following Novo’s post-results meeting in London, analysts said the launch of a compounded semaglutide pill by Hims & Hers, priced at $49 to $99, posed a challenge to the company’s Wegovy pill, which starts at $149.
Novo questioned the effectiveness of the compounded product, citing the absence of its proprietary SNAC technology, which allows the peptide to be absorbed in the stomach rather than broken down.
The company also issued a press release raising safety concerns and pointing out that the product lacks approval from the US Food and Drug Administration.
Citi analysts said they “have sympathy with Novo’s view”. Still, they flagged that efforts to remove compounders from the market had been unsuccessful so far, even though semaglutide will no longer be listed as in shortage by the FDA from February 2025.
They concluded that the situation represented “yet another overhang on the only bright spot in an otherwise difficult equity story” and reiterated a 'neutral' rating on the stock.