reports
- Dominic Rose
- Naresh Chouhan
Novo - Worrying Times (SELL, TP DKK350 [460], 13pgs)
Following the orfo’ P3 data, latest Wegovy scrips & rapidly faltering Ozempic growth, we conduct a wholesale review of our obesity market model, Wegovy & Ozempic scrip models & our Novo financial model. The outcome of this analysis is that we downgrade our 2030 sales by 20% and EPS by 24%. We now assume Novo only achieve a 25% obesity market share by 2030. We are 19% below consensus sales & 23% below EPS in 2030. We also provide a detailed hypothesis as to why US obesity demand growth is so lack...
- Dominic Rose
- Naresh Chouhan
US Tariffs - Broad Tariffs are Highly Unlikely (7pgs)
Following a number of recent events, we discuss in this note what we think is the most likely outcome for the Pharma industry. We show that broad based tariffs on drugs are highly unlikely, that even if it were to happen, the impact of a 20% tariff is
- Dominic Rose
- Naresh Chouhan
US Tariffs - Transfer Pricing Could Negate Impact (6pgs)
We show that Big Pharma would not have to shift a single element of supply chain to the US and can mitigate most, if not all, of a 20% tariff on drugs, just by changing their transfer pricing strategy. In a scenario where the US corporation tax rate falls to 15% but tariffs are 20%, we show that Big Pharma profits would be unchanged, while the US government tax take would more than double. The losers would be low tax jurisdictions like Ireland, but they would get to keep their manufacturing base...
- Dominic Rose
- Naresh Chouhan
Novo Nordisk - Cut to Sell - The Wood for The Trees (TP DKK 460)
Whilst the Wegovy scrips are scrutinised on literally a daily basis, US Ozempic softness seems to have been ignored despite Ozempic being 2x bigger than Wegovy in terms of global sales. New analysis makes us more concerned about Ozempic 2025 sales, than Wegovy. We are now 8% below the mid-point of 2025 guidance on sales & EBIT. We are 40% below consensus by 2030 on Ozempic sales, which could translate to a 16% cut to cons. group EBIT in 2030. We cut our group sales forecasts by 6-10% and EBIT by...
- Dominic Rose
- Naresh Chouhan
EU Pharma - 5 Reasons for Further Re-rating (Thematic, 42pgs)
Given the macro backdrop & our evidence in this note that Pharma can sustain faster than expected growth for the next decade, we believe investors should add to their Pharma positions. 2025 is the biggest year for pipeline readouts in recent history and we expect this to catalyse a re-rating. We show that 1) Pipelines are very robust, 2) The market underestimates the size of the “monster” blockbusters that account for 14% of all drugs, 3) 15% of 2030 sales are “generic resistant” due to the moda...
- Dominic Rose
- Naresh Chouhan
Novo - Cagri Data Makes Sense (BUY, TP DKK880, 11pgs)
We have conducted a deep-dive on the available literature & the CagriSema data and show that the inverse dose response is exactly what we would expect to happen and is what was seen in previous Novo studies. In fact, if we were to see the same cut of the data in REDEFINE4, we would fully expect tirzepatide to show the same thing. There is sufficient data (both clinical & in animal models) that shows that there is nothing untoward in the CagriSema data. Crucially, as we learn more about the biolo...
- Dominic Rose
- Naresh Chouhan
Novo Nordisk - Amycretin Data to Drive Re-Rating (BUY, TP DKK 880 [800...
After the disappointing CagriSema data, Novo shares de-rated in large part due to growing concerns about the sema patent expiry & ability to sustain growth beyond 2031. Whilst we did not share these concerns & are not worried about declines post the sema LOE for a multitude of reasons, we are aware that we are in the minority. However, with the amycretin data showing best-in class weight loss, Novo’s ability to compete with LLY, switch patients from Wegovy & deliver growth beyond 2031 is now muc...
- Dominic Rose
- Naresh Chouhan
Novo - Finding the Floor (BUY, TP DKK800 [1150], 11pgs)
The Novo Obesity bubble has well and truly burst, with every investor we spoke to asking about the worst case obesity scenario & what that means in terms of valuation. Despite Cagrisema having shown the best weight loss profile to date, we now assume the worst case estimates for Novo’s obesity franchise, with Novo only taking ~25% mkt share & treating only 7m US patients in 2030. The 2030 EBIT d/grade if cons. falls to our Cagri estimate would be just 8%, but we are fully cognisant of where sent...
- Dominic Rose
- Naresh Chouhan
EU Pharma 2025 Outlook - The Correction Was Due, Tread Carefully
In the aftermath of the H224 Healthcare correction, we look forward to 2025 with a more focused stock specific approach We show sector fundamentals have remained robust despite the correction. We see 4 key themes for the Pharma sector in 2025; 1) 2025 is a very strong year for important pipeline readouts, 2) The volume impact of Medicare Part D reform will dominate the narrative in H125 & continue to be a tailwind into 2026, 3) Margin expansion should be robust at a sector level, 4) Biotech M&A...
- Dominic Rose
- Naresh Chouhan
Novo - 2025 Growth Sensitivities (BUY, TP DKK1150, 8pgs)
Following management commentary on sales growth in 2025, we have calculated the implied sensitivity to Wegovy supply & the potential impact on consensus group sales. We show that high-teens group sales growth implies 40% US Wegovy sales growth in 2025. This is below consensus. Given our previous analysis [here] on falling Wegovy prices but higher volumes, the CTLT deal is now the most important catalyst, in our view: even more important than the cagrisema readout, which we forecast accounts for ...
- Dominic Rose
- Naresh Chouhan
Novo Nordisk - CagriSema Valuation Sensitivities (BUY, TP DKK1150)
Whilst the potential P3 data outcomes are widely understood, we are increasingly being asked what the valuation impact would be under various scenarios as investors position themselves for the upcoming readout. We assess 4 potential scenarios ranging from worst case to best case and calculate the peak sales impact, the NPV impact and what might happen to Novo’s valuation & multiple under each scenario. Based on the outcome, we see a $24bn delta in CagriSema peak sales, a -6% to +14% NPV impact...
- Dominic Rose
- Naresh Chouhan
Obesity Thematic - A Deep-Dive into Amylin
In the coming days at Obesity Week, we will see multiple datasets from amylin assets that could help to further support our belief that amylin combinations could become a material MOA in the Obesity market. Ahead of the Cagrisema P3 readout, we dig deep into the potential for amylin and show: 1) It has a superior tolerability profile, 2) Could preserve lean muscle mass and 3) Could be neuroprotective. We analyse the majority of the clinical data available on these drugs & show that the full prom...
- Dominic Rose
- Naresh Chouhan
Novo - Collapsing Wegovy Prices is Bullish (BUY, TP DKK 1150, 16 pgs)
In this deep-dive, we show that despite our 2027 Wegovy price of just $200/mth in the US, we are ~20% above consensus on Wegovy & ~30% above cons. on Novo’s Obesity portfolio in 2030. We show why we expect pricing to collapse but that market fears on pricing are far too pessimistic. We believe Wegovy will become the US market leader by volume and benefit from step edits from 2027 onwards. We model Commercial & Medicare channels separately for both price & volume & also show compelling evidence t...
- Dominic Rose
- Naresh Chouhan
Novo - Sema Likely to Work in Alzheimer’s (BUY, TP DKK1150 [1100], 11 ...
New analysis of 6 studies shows strong & conclusive evidence that GLP-1 use reduces Alzheimer’s (AD) symptoms, in our view. Novo are trialling oral sema (14mg) in AD, which is due to read out in Sept ’25. Following our analysis, we now assume a 70% chance of success for this trial, which is obviously very high for an AD P3 trial. We show that peak sales could be $10bn even though we assume $150/mth in the US. Furthermore, due to complex manufacturing, those sales could be much more durable. If w...
- Dominic Rose
- Naresh Chouhan
Obesity Market Deep-Dive - Part 1: Fragmentation Underestimated
In the 1st of a 3-part series, we show that the obesity market is set to become incredibly complex, with the current duopoly to be weakened, creating several investment opportunities over the coming years. We expect >15 drugs to launch by 2027, with >5 oral & >10 injectable, with >5 different mechanisms, from ~5 different companies. This fragmentation will create much more dynamism than currently assumed by the market. The statin market provides significant learnings for this fragmentation. We s...
- Dominic Rose
- Naresh Chouhan
Thematic Research - Quantifying The Impact From Part D Reform
In 2025, Big Pharma will be exposed to further US drug pricing reform as a result of the IRA act. This is the final big change to play out and we calculate there is the potential for a mid-single digit EBIT impact for some companies, but there is material heterogeneity in terms of the magnitude of the impact. There is also the potential for upside for Novo & LLY. However, given the significant complexity in the reimburse-ment changes & in computing the current sales in Medicare Part D, we are re...
- Dominic Rose
- Naresh Chouhan
Novo - Wegovy Stockpiling Almost $5bn (BUY, TP DKK1100, 5 pgs)
Our latest analysis shows that Novo could drive material consensus upgrades by starting to release a potential ~$5bn Wegovy stockpile. With Novo restricting Wegovy supply between Nov-21 & Dec-22, and then from May-23 onwards, they have built up a substantial stockpile of product, in our view. Our analysis of their inventory shows there is likely as much as $5bn of finished or close-to-finished Wegovy product at current US net prices. Our analysis of the supply chain and distribution strategy exp...
- Dominic Rose
- Naresh Chouhan
Novo - 8 Reasons It’s Going to DKK1100 (BUY, TP DKK1100 [850], 18 pgs)
Novo are just too good to bet against. We now increase our 2030 obesity franchise sales to $50bn and most importantly show that sema’ is only 27% of group sales in 2031. Therefore, if sema’ sales halve by 2034, it’s only a ~5% p.a. headwind to group sales 2032-34. Greater visibility on the post-sema outlook is a strong reason for the Novo multiple to be retained into 2025. We see 8 reasons why Novo will hit DKK1100 in the next year, driven by EPS upgrades, increased supply & P3 readouts. We see ...
- Dominic Rose
- Naresh Chouhan
EU Pharma - 2024 Year Ahead (28 pgs)
For EU Pharma, 2024 is likely to be characterised by EPS revisions, a handful of new launches & sluggish EPS growth for a number of names. The relative lack of pipeline catalysts makes forecasting sales and EPS much more important than for 2023. We identify 4 key issues to watch for: 1) Medicaid AMP cap removal, 2) Higher tax costs, 3) Higher debt costs & 4) a handful of very specific company issues that could make a material difference to performance (Novo: Wegovy supply, GSK: litigation, SAN: ...
- Dominic Rose
- Naresh Chouhan
Novo - Wegovy – 3 More Sources of Upside (BUY, TP DKK850 [800], 15 pgs...
Following the SELECT readout, we are increasingly asked by investors what is next for the Novo investment thesis. We now identify 3 sources of upside to Wegovy consensus forecasts & increase our peak sales to $28bn. We show that, 1) Medicaid is worth $6bn in peak sales & is largely ignored, 2) The lack of Medicare access is likely to have the perverse positive impact of raising Wegovy’s net price & the IRA now has a smaller impact, & 3) Supply into 2024 is likely to be better than consensus is m...
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