Shares of Danish pharmaceutical big Novo Nordisk slid 2.5% on Friday, extending a 2.7% loss on Thursday as analysts pored over the main points of the agency’s first-quarter results and monitored a possible rival weight reduction remedy.

The firm reported that gross sales for its blockbuster injectable weight reduction remedy Wegovy, greater than doubled to 9.38 billion Danish kroner ($1.4 billion). Novo Nordisk, which additionally makes diabetes remedy Ozempic, mentioned the rise in gross sales had offset a slight discount in costs.

Novo Nordisk expects costs to drop additional as new entrants enter the market, CFO Karsten Knudsen mentioned on a media name, including that the corporate was not seeing a lot proof of Wegovy customers transferring to different rival therapies.

Analysts expected even increased weight reduction drug gross sales within the quarter, and a few famous that Novo Nordisk’s 2024 outlook elevate for each gross sales development and working revenue was resulting from one-off accounting changes.

“While we continue to see Novo as a wide-moat firm, with strong intangible assets surrounding its cardiometabolic business, we think high obesity drug demand and a scarcity of supply have driven share prices above their intrinsic value,” Karen Andersen, strategist at Morningstar, mentioned in a Thursday word.

The growth in demand for weight reduction therapies noticed Novo Nordisk overtake French luxurious group LVMH to turn out to be Europe’s Most worthy firm final yr. Shares gained 49% in 2023 and are up 25% yr so far.

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Sales numbers had been “a little bit light, expectations got ahead of themselves … and you still have these supply challenges at Novo,” Jared Holz, health-care fairness strategist at Mizuho, advised CNBC’s “Fast Money” on Thursday.

Analysts at Stifel trimmed their goal worth on the inventory to 950 kroner, down from 960 kroner on Friday.

Weight loss drug makers had been in the meantime broadly decrease after U.S. agency Amgen mentioned it was “very pleased” with preliminary trial outcomes for its injectable weight problems remedy MariTide.

The potential improve in competitors is hanging over each Novo Nordisk and U.S. juggernaut Eli Lilly, which additionally raised its outlook this week, as extra weight loss players emerge to shake up what has largely been a two-horse race.

Both firms are consequently researching new potential weight reduction therapies to keep up an edge.

“When we look at the entire space, Novo and Lilly are dominating because they were already great existing players in diabetes. This obesity market is very tangential, it’s very simple for them to pivot a very similar patient population to obesity,” Holz mentioned.

It may be potential for newer gamers like Amgen to take 5% to 10% market share over time, or for the totality of rivals to take 10% of the market, however the advance of Eli Lilly and Novo Nordisk is “going to make it really tough,” Holz added.

Correction: The firm reported that gross sales for Wegovy greater than doubled to 9.38 billion Danish kroner ($1.4 billion). An earlier model misstated the U.S. greenback determine. Karen Andersen is a strategist at Morningstar. An earlier model misspelled her identify.

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