Novo's share price has nearly tripled since Wegovy was launched in June 2021 in the United States, where it has proved a phenomenal success, making the Danish drugmaker Europe's most valuable listed company, ahead of luxury group LVMH (LVMH.PA), worth about $437 billion.
But Novo has struggled to keep up with soaring demand for the appetite-suppressing, anti-obesity drug, forcing it to limit the number of patients who can start treatment.
It has also debuted the Wegovy injection in the UK and Germany in recent months, but availability is limited even though there is enormous pent-up demand.
"Supply of Wegovy is the most important thing for specialist healthcare investors covering Novo right now," said Barclays analyst Emily Field.
In August, Novo said the curbs would most likely extend into 2024. The U.S. Food and Drug Administration has said it is not clear when supplies will normalise.
Some analysts said a firm date would ease concerns that Novo's supply constraints could allow rival Eli Lilly (LLY.N) to get ahead, when it launches its Mounjaro weight-loss drug.
Eli Lilly, the world's most valuable drug company ahead of Novo, has said it expects U.S. approval for the drug, currently licensed for diabetes, to be used for weight loss by the end of the year.
The weekly injections belong to a class of drugs known as GLP-1 agonists, which analysts estimate could be worth as much as $100 billion by the end of the decade.
Earlier this month, Novo raised its outlook for sales and operating profit for the full year for a third time this year, reflecting strong demand for Wegovy and its diabetes medication Ozempic, which contains the active ingredient semaglutide.
It also said operating profits soared by a whopping 47% in the third quarter and sales by 38%.
Markus Manns, a portfolio manager at Union Investment in Germany and Novo shareholder, said that while easing supply restrictions were already priced into the stock, he would expect more downward pressure if supplies were further delayed.
"However, after the positive recent earnings pre-announcement, I would not expect any negative manufacturing news from Novo in the short term," Manns said.
Novo will release full third quarter numbers on Nov. 2.
BOTTLENECKS
The company has so far released scant details on its supply chain for Wegovy and Ozempic, but shareholders are increasingly trying to understand where the bottlenecks are.
Novo is spending billions to increase Wegovy output and hiring more contract manufacturers to fill the pens.
Catalent said at the time it has a track record of providing high-quality production and that it corrects any compliance issues promptly.
"We just have no insights into (supply of Wegovy). The company could plausibly say, 'we're back with supply and ready to go' or 'sorry, it's taking a little longer'. It's a flip of the coin," said Field.
U.S. prescription data for the third quarter did not indicate that supply of the three lowest Wegovy doses, also known as the "starter doses" had improved, analysts at Jefferies said in a research note on Oct. 20.
If Novo next week cannot give a date for when it will cease supply restrictions for the lowest doses of Wegovy in the United States, that would be seen negatively by the market, a London-based healthcare investor said.
($1 = 0.9451 euros)
