Not long ago, it seemed pretty clear who was winning the war of the weight loss drugs. Novo Nordisk, Novo Nordisk, Novo Nordisk, Novo Nordisk, Novo Nordisk, the king of the weight loss people. Novo Nordisk, the Danish drug maker behind Dozenpik and Wagovi, basically kick-started an entire industry. But now, the race looks very different. Really bad news for what was the first mover in this space. Shares of Novo Nordisk plunging by the most on record today. The weight loss trailblazer is rapidly seeding market share to rival Eli Lilly. Novo's biggest rival, the American pharma giant Eli Lilly, has surged ahead. Lilly's obesity shot, Zepbound, helps patients lose more weight than Novo's Wagovi. But Novo has an edge in one critical area. Weight loss pills. The company released the Wagovi pill earlier this year, and it quickly became the biggest drug launch in recent history. At the center of all this is Mike Deustar, the CEO who was hired nine months ago to breathe new life into Novo Nordisk. Mike Deustar, welcome to the journal. It's nice to be here. Thank you very much, guys. I reached Mike last week at Novo's headquarters near Copenhagen. I wanted to understand how the company that started this whole boom found itself playing catch-up. When you look back, where did Novo mess up? Yeah, I wouldn't call it messing up. I would say the curse of a leader. When you basically go forward in a dark tunnel trying to pave the road for everyone else, there will be issues that no one has told you about because no one has been there before. But can Novo Nordisk change fast enough to keep up with the revolution it started? Many of our colleagues feel like, okay, there's a new CEO now in town, and he started his transformation. And great after we get the sales back on track, it can go back to what it was. And it will never go back to what it was. You need to move forward. Welcome to the journal, our show about money, business, and power. I'm Jessica Mendoza. It's Tuesday, May 26. Coming up on the show, the CEO of Novo Nordisk on the company's rescue plan. Security program on spreadsheets, new regulations piling up, and audit dread. It's time for Vanta. Vanta automates security and compliance, brings evidence into one place, and cuts audit prep by 82%. Less manual work, clearer visibility, faster deals, zero chaos. Call it compliance, or call it calm compliance. Get it? Join the 15,000 companies using Vanta to prove trust. Get started at vanta.com. Mike Deustar is a Novo Nordisk lifer. He started as an office clerk more than 30 years ago, before rising through executive jobs and becoming CEO. When he took the top job in August, he was brought on to make the company more aggressive, and to view patients also as consumers. It's a big shift for a company that spent a century focusing on insulin and diabetes. But Mike believes Novo needs to change with the times. I think companies that transform are the ones that survive. The ones that basically operate as 10 years ago, or in our case 103 years ago, will not have the license to operate. We found ourselves now in obesity, and that's a very different ballgame. Much more fast paced and much different patient profiles. In some ways, you need different skill sets now to lead it into the next decades. When you say Novo had to learn new skills, what are those skills? What I think we have learned the last few years, you could argue that the tough way, the difficult way, is how different a patient with obesity feels compared to a patient with diabetes. We thought from a science point of view, these are very closely linked because especially type 2 diabetes, the leading cause of type 2 diabetes is obesity. Take any patient suffering from diabetes and ask them, how do you feel about tomorrow, about the future, about your life? They will often put a sentence or two together with fear in the center of that. They will say, I'm afraid of tomorrow, I'm afraid of dying young, I'm afraid of amputation, I'm afraid of blindness. Ask the exact same question to a patient that's suffering from obesity. Fear doesn't come around. It's often around shame. They say, I'm ashamed. I'm ashamed of going out of the door. I'm ashamed of being judged. I'm ashamed of being bullied. That difference means that you need to act very differently. For one thing, we thought that the only way an obese patient will get its product will be through a physician because that's how a diabetic and many other chronic diseases are procured. You can see that both for us as well as for our main competitor, Eli Lilly, the fastest growing segment is through the e-health channels, channels that patients go and find their doctors online and actually then receive their products also online. The reason is many of those patients, they don't want to go to a physician and be judged while they're sitting in the waiting room. As a company, you're having to create these avenues for these patients is what you're saying. Absolutely. We needed to learn while we are still very patient-centric how we can also tell ourselves that many of these patients are acting more like a consumer, a fast goods consumer, rather than a traditional patient and the doctor and hospital setting. It's by the way, neither or it's both. I mean, there's no question that Osempic changed the game, but you can't kind of operate in this space and not be aware of what your competitors are doing. So with Zepbound in the market, it's both clinically more effective drug than Wagovic, now has greater market share. How did that happen? What happened with Zepbound, I would say, is they saw our product into the market first and they basically saw that it has a 15, 16% weight loss efficacy. I have not been in their boardroom. I could only imagine that someone said, well, if we come with a 15, 16% weight loss drug, it's a MeToo product and then they came with 21%. Now, the other thing I think your audience should know is while today everyone is obsessed with the magnitude of weight loss and one or 2% up and down on that moves people's share prices dramatically, I will promise you that five years from now, that will be part of the dialogue and not the main part. So what do you think the main part will be? The main part will be health gain. When is the last time you found a single person anywhere that you know of that died from obesity? No one dies from obesity. Obesity does not kill. Obesity causes other issues. You die from heart attack. You die from kidney failure. You die from fatty liver. You die from number of other conditions that is linked to obesity, but their health issues We basically said the stuff beyond weight, health, kidney, liver, heart, stroke, that's what matters. I think that was right, but it was ahead of its time. So the focus now for Novo Nordisk is not so much the magnitude of weight loss of its products that are coming out and more the additional benefits for people who have obesity? I think one of the learnings coming back to your first question is that I think they're not exclusive of one another. I think Novo was a bit, you could say, traditional, maybe stubborn even, that thought, okay, it's a chronic serious disease and it's only about beyond weight. To some, the magnitude of the weight loss matters and Novo needs to be there for them. And on that note, I mean, I want to look at something that you've had in the pipeline for a while. Novo had high hopes for your next generation drug, Kegar Sema. It was supposed to be a huge deal because it would combine an existing GLP1 drug with a compound that targets amyland, this different hormone. But in a head-to-head trial, we're talking magnitude of weight loss here again, but Kegar Sema did fail to beat Lily's Zephound and the results wiped out $100 billion more in Novo's valuation in one day. I mean, how big of a setback was that for you guys? Well, if you look at it from that single-day share price, we lost people's money that were invested in our share price on the back of that news. So you could, I do not belittle that, but having said this, I'd like to also bring you and your audience back to exactly what we were just speaking about. On that single trial, it was called Redefined 4. Yes, we showed that Kegar Sema does 23% weight loss. We showed that our competitors' product does 25%. Now, just take that at face value. The distance between 23% and 25% is 8% difference between those two numbers. Was it a question of expectations that you had set with Kegar Sema? No. You have to, of course, ask all those who sold on that day why, and I think that the reasons will be very different from one person to the other. But I do think when you're on the high, everyone feels like there's nothing you can do wrong. When you're an underdog, people have to get their trust back on you before they basically still go forward with you again. But Novo has had a huge success recently with its weight loss pill. It is becoming very, very clear that Novo Nordisk is the pill leader in the world, and we need to really make sure we keep that leadership. That's next. Novo Nordisk launched its Wagovii pill in January, and almost immediately, it became one of the hottest drug launches in America. The pill generated more than 1.3 million prescriptions in the first quarter. Strong sales of the Wagovii pill gave Novo one of its biggest stock jumps in months, and helped beat Wall Street expectations in its latest earnings. Importantly, it also helped Novo score a scientific win. The Wagovii pill helps patients lose more weight on average than Lily's rival pill, Foundeo. Although, taking the Wagovii pill involves food and water restrictions. Foundeo doesn't have those. You did have a big success with the Wagovii pill. How important is this to your overall strategy? It's very important. This has become the best product launch in the US history in volume outside of a single vaccine, I believe. I think that's great, and I'm very proud of that. I didn't get me wrong, but the part that I look more is 80% of the people that are coming and picking up these products are not my Wagovii customers. They're new customers. They're people that have been waiting and waiting, and maybe with envy, they see their friends and family members lose weight, but they just didn't want to take an injection. For whatever reason, that could be the taboo of injection. It doesn't really matter. They simply didn't want an injection. We decided to go the difficult way of putting a peptide in a pill. Peptides are getting very famous nowadays. I would say when we started doing this, no one knew what peptide is, but now we have— Yeah, nobody is using that word at all. But now we have the first and the only peptide in a pill in the world. That's why I can brag about 16.6% weight loss, 17% weight loss versus a lower efficacious version of those that happens to be chemically induced. That means that the patient does not have to compromise between injection and a pill. In that context, of course, then we have seen a very good uptake. If you look ahead in 10 years, what proportion of your weight loss patients do you think will be on a pill versus taking a shot? I don't know. Does it matter? It doesn't matter. At the core of it, it's the same raw material. If tomorrow people buy more pills for me than injection, then I'll turn the knob in the raw material factory to the right-hand side. If people want more injections, then I turn it to the left and basically make sure that I have flexibility on that. So it's answering to what the market wants, basically, is your— Correct. Okay. I want to talk about pricing now. Novo is slashing the official US prices for Wigovia and Osempic to $675 a month starting next year. That's 50% drop for Wigovia, about 35% for Osempic. By doing this, you're dramatically reducing the margins for the drugs that made you, at one point, the most valuable company in Europe. Why take an X-tier margins like that? Yes. So first of all, you have to think that very few people were paying the list price to us or anyone else for that matter. Every pharmaceutical company in US typically gives enormous double-digit discounts to bring you to the net. And the distance between the list and the net has become, in my opinion, out of whack. And so is the idea here to make these affordable to as many people as possible on a mass scale to get Wigovia and Osempic to as many people as possible? So the vision, I think, for our company is to have multiple assets available within the area of, let's say, diabetes, obesity, and cater to all people. Not have products only for the rich, but also not end up to be a generic high-volume, low-margin business that cannot innovate anymore. When do you expect this pricing strategy to show that it's paying off? I think it's, again, not a one-off event. It's a gradual thing. If you take a look at it, as volumes go up, prices usually come down on any product. We cannot expect that we sell at current prices to two billion people, these medications. That's just naive. On the other hand, of course, you also don't want to run it too fast without having the next generations of the products and without having the needed cash flow to put into R&D and innovate again. So it's a balance. Speaking of innovations, we already know about Kagoshima. What's next in the pipeline? We have a lot of exciting things, and some of which, of course, I can openly share, some of which I have to simply wait and see. Are you sure? I mean, you could just give us a little peek. We were planning a capital market day later on this year, and we will reveal more than right now. It's public at that point. But I can tell you that we are really making sure that early-stage pipelines, mid-stage and late-stage, are all progressing faster than anyone thought it was actually possible. Mike did tell me about some of the things Novo has in the pipeline. A next-generation obesity pill to succeed the Wagovie pill. Drugs designed to be easier on patients' stomachs. And medicines aimed at illnesses related to obesity, like late-stage fatty liver disease, cardiovascular disease, and kidney disease. And Novo is still competing to make the most powerful weight loss drug. We have a triple agonist, which we just announced called UBT251, which was actually a Chinese acquisition. And in early results of mid-stage that we have seen, it is best in class in number of parameters. On UBT251, when you talk about best in class, does it have the potential to achieve greater weight loss than Lilly's redotrutide, which has been shown to have 28% weight loss? I believe it's the number that just came out. Correct. Well, my hope is the answer is yes. But early results of the comparative data from their mid-stage results versus ours shows the benefit and points the benefits to our asset versus theirs. Of course, you have to progress into late-stage clinical development and eventually bring it to the market so things can change. But based on Apple to Apple comparison of early results, I would say the short answer to your question, yes, it can. Mike, it sounds like you have plans for dealing with the challenges that Novo is facing. I'm taking away from this conversation. You're a pretty optimistic guy. But I'm curious, what keeps you up at night these days? I think, well, I sleep well. But I sleep well. I don't sleep enough. This job is a bit taking away from the hours of sleep. But when I sleep, I feel good about what we're doing. I think there are the sense of purpose, the ability to actually see people benefiting from what you're doing is second to none. And we are dealing with not rare diseases. We're dealing with conditions that we all know someone in our family and circle of friends suffering from. Life is a journey that's going to take a long time. And we should not get too quickly nervous about the daily disruptions and the daily fluctuations, let's say, of the share price. We should take it serious, but we should not get too nervous. We're going to lose our job just because the share price is down today. And that also makes me sleep better. What got us here for 100 years was not pure luck. There was something behind it. But why not the next 100 years? Well, Mike Deustar, CEO of Novo Nordisk, thank you so much for joining us. It's a pleasure to be here. Thank you very much for having me. That's all for today, Tuesday, May 26th. The journal is a co-production of Spotify and the Wall Street Journal. Thanks to Peter Loftus. Thanks for listening. See you tomorrow.
