Novo Nordisk has raised its annual performance guidelines, continuously catalyzing the weight loss industry chain. On October 13, 2023, Novo Nordisk announced a 33% increase in revenue and a 37% increase in operating profit for the first three quarters (calculated at a fixed exchange rate of CER). Raise the annual revenue guidance to 32% -38% (originally 27% -33%), and increase the annual operating profit guidance to 40% -46% (originally 31% -37%). Mainly benefiting from the continuous growth of terminal sales of Smeglutide Ozempic (hypoglycemic), Rybelsus (oral hypoglycemic), and Wegovy (weight loss).
The GLP-1 research and development pipeline continues to advance, promoting the continuous expansion of the terminal formulation market. In August 2023, Novo Nordisk megglutide achieved positive results in the Phase III STEP HfpEF trial for the treatment of heart failure. Compared with placebo, subcutaneous injection once a week (2.4mg) can reduce the major adverse cardiovascular events (MACE) of overweight or obese patients with cardiovascular disease and without diabetes by 20%. On October 10, 2023, Novo Nordisk announced that the Phase III clinical FLOW of Smeglutide for type 2 diabetes patients with chronic kidney disease was terminated early due to its excellent efficacy. The expansion of several subsequent Phase III key studies, such as nonalcoholic steatohepatitis (NASH), Alzheimer's disease (AD), diabetes nephropathy and other indications, is expected to promote the continuous expansion of terminal preparations.
The peptide industry chain is expected to continue to benefit. The continuous expansion of GLP-1 weight loss drugs has driven the demand for peptide drug APIs and CDMO. The barriers to peptide drugs lie in the control of the synthesis process, the quality and purity of batch products, and the control of large-scale production costs. At the same time, it involves complex separation and purification as well as primary and advanced structural identification, which requires high technological capabilities and financial reserves of relevant enterprises. The expansion of the downstream drug market is expected to boost the demand for upstream raw materials (amino acids, chemical reagents, resins, etc.), as well as related API and CDMO enterprises. Companies with technological platform advantages, compliant GMP production capacity, and project delivery experience are expected to benefit.
Maintain industry overweight rating. Maintain the overweight ratings of WuXi KangDe, KaiLaiYing, HuaDong Pharmaceutical, and XinDa Biological. Other beneficiaries: 1) Drugs: Borui Pharmaceutical, Hanyu Pharmaceutical, United Laboratories, Shuanglu Pharmaceutical, Lizhu Group, Ganli Pharmaceutical, and Tonghua Dongbao; 2) CXO and raw materials: Jiuzhou Pharmaceutical, Nuotai Biotech, San Nuo Biotech, and Haixiang Pharmaceutical; 3) Upstream reagents and consumables: Lanxiao Technology, Haofan Biology, and Jinkaishengke.
Risk Reminder: Risks of intensified industry competition, risks of R&D not meeting expectations, risks of policy changes, and geopolitical risks.