諾和諾德 (NVO) 2021 Q2 法說會逐字稿

Hello, and welcome to the Q2 2021 Novo Nordisk A/S earnings presentation. (Operator Instructions) And I will now hand the floor to Lars Fruergaard Jorgensen, CEO. Please begin your meeting.

Thank you very much. I'm Lars Fruergaard Jorgensen, the CEO of Novo Nordisk. I'd like to thank Citi for hosting us on this call today. With me, I have Karsten Munk Knudsen, our Chief Financial Officer; Camilla Sylvest, Head of Commercial Strategy and Corporate Affairs. We have Doug Langa on the line, and Doug is responsible for our North American operations. And we have Martin Lange, who is responsible for development.

We will do a quick run through of the slides from our earnings release call, and then we'll be ready to take your questions.

So I have to start by reminding you that we'll be making forward-looking statements today. And that such statements are, of course, subject to risks and uncertainties as the future might turn out to be different from what we indicate today.

I'll start then by a few highlights. You are probably well aware of our strategic aspirations for 2025, and we're very pleased that we have made strong progress on all 4 dimensions through the first 6 months of 2021, both in the area of social responsibility and being a sustainable business from an environmental point of view.

We have made strong commercial success on all 3 parameters. You'll hear more about that in the presentation. We have also made good progress on innovation and therapeutic focus, not least with the recent approval of Wegovy in the U.S., which I'm sure we'll be talking a lot about in the Q&A. And then we have upgraded our financial outlook based on strong performance for the first 6 months, but also continued high expectations for continued momentum for the rest of the year.

So a very strong start to the year, and we are quite optimistic about the future.

With that, I'll hand over to Camilla for some highlights on our commercial performance.

Yes. Thank you, Lars. So in the first half of 2021, our sales increased with 12%, driven by both International Operations and North America operations, and also, all therapy areas contributed to growth.

North America operations grew 11%, International Operations by 13%, and our diabetes care franchise with 11%. But also, our obesity care franchise has reverted to previous growth level and is now at 34% growth for the first half year. And biopharm also at a growth level of 7% for the first half.

And on this slide, the next slide here, you see our progression towards our strategic aspiration of 33% market share, and the total diabetes market is improving where we are adding 0.5 percentage points and are now at a market share of 29.6%. This is driven by both GLP-1 market share growth and also insulin market share growth.

We've now launched Ozempic in 62 countries and Rybelsus in 18 countries.

If we take a deeper dive into IO, you see solid diabetes sales growth across all regions, in International Operations, and a total growth of 13%.

On the right-hand side, you see our share of growth steadily improving in the diabetes care market, and also, our total diabetes market share improving with 1.4 percentage points versus 2020. So we are now at a total share of 23.9%.

In our biopharm operations, our sales grew by 7%, driven by both North America operations and also International Operations, and also driven by our legacy products, Norditropin and NovoSeven, but also by our new launches in the rare blood disorders that grew by 11% due to the uptake of our products, Esperoct and Refixia.

And now over to Doug for an update on the U.S. market.

Thanks, Camilla. So as you saw in our announcement, and what Camilla just spoke to, it was really an excellent first half of 2021 for the GLP-1 franchise, where sales grew 24% in North America. Specifically, in the U.S., the volume market growth was 25%, and that was driven by Ozempic and Rybelsus.

Importantly, Novo Nordisk is maintaining the NBRx leadership with Ozempic being the leading brand. And in terms of total prescriptions, Novo Nordisk also maintained market leadership at over 50% market share.

If we can go to the next slide. So Rybelsus continues its steady volume growth, which has been solid considering 2 COVID-related commercial lockdowns. The sales force returned in mid-May, and that did support continued increase in prescription uptake, at least at its current pace.

We're confident in Rybelsus. We do believe it's the most efficacious OAD. So again, we're confident in this long-term outlook. Importantly, there's leading indicators such as breadth of prescribers, awareness, and source of business that reinforce our confidence as well as the continued strong market access.

In terms of the rest of the world, as I mentioned on Wednesday, we've launched in 17 other countries. Importantly, Japan, and as I noted, it was a 0.7% modern OAD market -- value market share, but also noted that there's still continued lockdowns in Japan, which makes it difficult for patients and sales forces. So that should be noted.

If you go to the next slide. So obesity sales are back to a growth profile of 34%. Wegovy and Saxenda have contributed to a rebound both in Novo's sales growth and in AOM growth. Obviously, Wegovy has been particularly impressive, and same number of weekly scripts, it took Saxenda 4 years that we saw in Wegovy to date. This is overwhelming initial demand has put, as I mentioned the other day, pressure on the supply chain, leading to a temporary shortages for the starting dose, which again is 0.25 milligram.

Now, as a company, Novo Nordisk, we are committed to ensuring that any patients who start on Wegovy can continue, and production plans are being adjusted to satisfy the current demand.

So Martin, over to you.

Thank you very much, Doug. Also, in R&D, we see a very nice progress of our pipeline and our portfolio. This being across diabetes, obesity, our biopharm franchise, but also in other serious chronic diseases.

Specifically, in other serious chronic diseases, I want to call out 2 things. First, being our Phase III initiation of our trials in Alzheimer's disease. As you obviously well know, there's a substantial unmet need in Alzheimer's, this being a high impact for patients, their relatives, but also from a societal perspective. We have good and strong indications from both real-world evidence, but also post-hoc analysis from all our cities that being on a GLP-1 analog potentially might have an impact on the outlook for a dementia diagnosis. And we've seen decreases in dementia diagnosis to the tune of 25% to 50% in this setting.

This has prompted us to initiate this Phase III program, totaling a total of 3,700 patients, the majority of whom having a diagnosis of mild cognitive impairment or dementia of the Alzheimer's type.

It should be called out that in the above class, we also have 20% of patients who have small vessel pathology, thus leaving us with the potential for a broader label of deemed successful.

Next slide, please. In -- staying in other serious chronic diseases. In the cardiovascular space, we have a clear ambition of having a launched product between 2024 and '28, with a novel mode of action and addressing a substantial unmet need.

As you already know, we do have a robust cardiovascular pipeline, but expanding that, and also fitting very nicely into that pipeline, we've done an exclusive worldwide collaboration and license agreement with Heartseed business to address heart failure with stem cell-based therapy. And we have done an acquisition of Prothena's ATTR amyloidosis program, addressing a somewhat rare disease, namely ATTR amyloidosis. This is a very, very severe cardiovascular disease leading to buildup of amyloid plaques in the cardiac muscle, leading to heart failure and then subsequently, a high risk of death.

These 2 deals, as I said, very nicely fits into our cardiovascular aspiration, supplementing our already clinical assets with Ziltivekimab starting Phase III in this quarter, and oral PCSK9 where we have started Phase II trials actually last week. It also supplements our activities in our ongoing major cardiovascular outcome trials namely SELECT, SOUL, FLOW as well as FOCUS.

Next slide, please. So across the board, both in first half, but continuing into second half of this year, we see a very nice progress of our pipeline with Phase III activities in all of our therapy areas, including biopharm, diabetes, obesity and other serious chronic diseases.

With that, over to you, Karsten.

Thank you, Martin. During the first 6 months, we delivered 12% sales growth and 9% operating profit growth. This is the highest sales growth, as a company, we delivered since the first half of 2013. So really strong momentum in the first half and even an acceleration during the second quarter compared to what we delivered in the first quarter.

In terms of our tax rate, then we had a change to our historic tax positions, which helped our tax rate in the quarter, and now we're 19.8% in effective tax rate. All in all, a net profit of 10% and earnings per share of 12% for the first 6 months.

As you've seen in previous quarters and years, then we're very disciplined in terms of, first of all, converting our earnings into free cash flow. And from there, allocating our free cash flow to shareholders through dividends and share buybacks. And in line with previous years, we are also issuing an interim dividend this year. And this year, it will be DKK 3.50, which will be paid out in August of 2021.

And then, as a side note, you may have noticed that we issued a Eurobond program, an EMTN program of EUR 5 billion, of which we have utilized EUR 1.3 billion, mainly funding the Emisphere acquisition, which took place last year.

As to the financial outlook for 2021, based on the strong momentum in the first half, driven by our obesity business, our diabetes care business, which is growing 11%, and biopharm, we are now expecting 10% to 13% top line growth, and 9% to 12% operating profit growth. Based on the adjustment in tax position, our effective tax rate is now 19% to 21%. All in all, a free cash flow expectation of between DKK 39 billion and DKK 44 billion.

With that, over to you, Lars.

Thank you, Karsten. So we are well on track on achieving our strategic aspirations for 2025. We, as you can hear, are very pleased with our performance in the first 6 months of the year, and the outlook, which has been upgraded.

So with that, we'd like to start the Q&A session and we'd like to limit each ask for one or maximum 2 questions to ensure we can get as many participants through with their questions as possible.

So operator, we're now ready for the first question, please.

(Operator Instructions) Our first question comes from the line of Peter Verdult of Citi.

Peter of Citi. Just a quick question on the Wegovy dynamics. Can you give us any ballpark indication of sort of portion of the U.S. sales force mobilized for the launch? And any sort of data on the prescriber based dynamics? I think historically, when we talked about Saxenda, you said anywhere USD 5,000 for prescribing. I realize we're very early in the launch, but any data or update there would be appreciated.

Thank you, Pete. And Doug, if you're still on the line, you can talk a bit through the portion of the sales force and what we see from the initial prescriptions, please?

Absolutely. Thanks, Pete, for the question. So we have a dedicated sales force for obesity, and it's roughly 350 individuals. And we have a -- and also a special marketing team -- a dedicated marketing team, I guess, I should say. And they're all 100% full-time on the obesity franchise. And specifically right now, Wegovy. So I think that would answer your question there.

The second question you had around the dynamics. We are seeing a mix of PCP, nurse practitioner, IMs. But in the end, the primary bulk of our prescriptions, if we follow what we've seen with Saxenda will be majority through PCPs. So I think that answers both.

That comes from the line of Wimal Kapadia of Bernstein.

Wimal Kapadia from Bernstein. I was just sticking with Wegovy, but can I specifically ask about International Operations. So firstly, is it fair to assume a similar pricing for Wegovy to Saxenda, so around $8 to $10 in the developed IO markets and slightly less elsewhere?

And then the second part of the question is, the split prior to COVID for Saxenda was around 60% U.S. and 40% IO. And in 1H '21, we are close to 50-50. So I'm just curious how you think about the Wegovy split at steady state? I know it's still early, you haven't launched in IO yet, but is it possible that IO could be a bigger region for the product than the U.S.?

Thank you, Wimal. Camilla, can you talk a bit to -- although it's early days since we have an approval outside the U.S., conservations (sic) [conversations] around pricing and also what to expect in terms of split of business between the 2 operational units?

Yes. So as Lars mentioned, it's still early days and difficult for us to comment on pricing at this point in time. But of course, you've seen how we have priced Wegovy in the U.S., 3x the efficacy at a price that is similar to Saxenda. So I think that is -- that's what we have for now. And then we are, of course, waiting for the approval in Europe, and then we will get into the pricing in IO after that.

In terms of the split, it's, of course, based on population sizes and general development and rollout of launch is expected that for most of our products, in general, IO, over time, will become bigger than the U.S. simply as we roll out. And that is what you've seen for our general franchises and of our total sales also. And over time, of course, we also expect that in obesity, that could be a similar approach, mainly due to the number of people and the number of launches, of course.

That's from the line of Michael Leuchten of UBS.

Michael Leuchten from UBS. 2 questions, please. One to Karsten, given that a fairly significant part of the volume for Wegovy is commercial this year. How is that going to show up in the P&L given the co-pay buy down versus the free drug that's going into the market as well. So which lines of the P&L do we need to keep an eye on as the year progresses?

And then a question on China. You said yesterday, you are adding sales reps to your footprint there. As we are going into VBP next year, is that going to accelerate? Is that going to decelerate? Will you be able to reallocate resources in China, if and when special VBP happens? Or is that a decision that's independent of whatever happens to special VBP?

Thank you, Michael. First, Karsten, on how we go, we will show P&L considering the co-pay and the buy down, and then I'll address the VBP.

Yes, Michael, so all our co-pay programs, they are being treated accounting-wise, as safe reduction. So it will all be in the sales line.

So that was very clear. So on China, VBP, firstly, we look at China as a strategically important market for Novo Nordisk. It's one where we have been, for historical reasons, relatively late in launch of our new portfolio of products, which is now happening.

Then you extend parallel with that, the Chinese authorities are looking into how can they develop a more, say, from a cost perspective, sustainable health care system, one where -- old products where there is competition, generic or biosimilar products, you drive down price, so you can have capacity to embark on new innovative treatments.

So as such, China is strategic for us. And our base case is that even despite of potential VBP in 2022, we still see growth opportunities in China. And we are expanding our commercial capabilities in China to make sure we get the full value out of, say, rolling out GLP-1 portfolio and also conducting clinical development of our latest innovations like weekly insulin in China.

So of course, we need to see what will happen and how they will approach the VBP potentially, but we believe there's still room for us to make sure our innovation hits the ground and commence a nice growth trajectory based on the footprint we have in China.

That's from the line of Sachin Jain of Bank of America.

Two questions, please. Firstly, on supply chain. There was a question on time frame of resolution yesterday, and you didn't really want to answer. Is that because you don't know or you don't view as material?

And related, just to sort of extend the supply chain question a little bit further. Do you think you can sell or you can make across '21 and '22?

And then the second question is on Rybelsus. Doug, appreciate the answers or thoughts on COVID being the likely explanation for slowdown in scripts. But the other change in the last 12 to 18 months has been the broadening of labels for SGLT2s to include heart failure and potentially CKD. So the question is what percentage of diabetes have those comorbidities where a cheaper SGLT2 may be preferred?

Lars, do you want me take the Rybelsus question first?

Sorry, I had not pressed the microphone yet. Sorry, I'll start by addressing the supply chain question and then Doug, Camilla, Martin can address the other Rybelsus SGLT2 type question.

So on supply chain, we have all seen the development of scripts here in the initial launch phase. And we have had strong hopes for Wegovy. But to be honest, we have not anticipated here in the initial launch phase an uptake like what we have seen. So we have a temporary shortage while we continuously ramp up and build the needed capacity.

So we have some territories in the U.S. where we are out of -- the start of those -- product is available, but it's not as easily accessible as we would have wished. So of course, we are ramping that up.

So right now, we can sell what we have. I think we can ramp up. So this should not be a problem as we look monthly into the future. So -- but again, we need to see how the pool develops. So there is a balance between supply and demand, obviously.

But we're confident we can handle this because this is ramp-ups like we have done before, and it's known technology for Novo Nordisk.

Then to the second question, would -- Doug, would you start out, please?

Yes. I can start off. Maybe Camilla also add in. So Sachin, thanks for the question. Unequivocally, the impacts of lockdowns 2x, 2 major lockdowns had an impact on a promotionally responsive product. And when we entered in, in essence, the third time, there was label update, heart failure, chronic kidney disease, increased brand awareness for the whole entire SGLT2 category.

So what I would like to say is we're still growing share. If you look at current NBRx, 13% in GLP-1 space, 10% NBRx in the modern OAD space. And when you look at, as I mentioned, the other day, leading indicators, whether it's prescriber breadth and depth, we're adding prescribers per week, we're building and continuing to build brand awareness really above most SGLT2s. And the source of business is still remaining mostly outside of GLP-1 class. So all of those, I think, are positive.

Camilla, I don't know if you have any other context?

No. I think, Doug, that's clear. We're very encouraged that the depth, so the number of scripts per physician that prescribes Rybelsus is actually slightly higher than Jardiance, Januvia for NBRx. So for us, that's a positive sign.

The next question comes from the line of Mark Purcell of Morgan Stanley.

On Wegovy, how do you estimate earlier in the Wegovy launch that 50% of prescriptions are going to be reimbursed? And what is your level of confidence this will be maintained? I'm just wondering whether physicians are more willing to push through prior auths on Wegovy compared to Saxenda, given its superior efficacy profile.

And if you could help us understand sort of related, when you compare on CVS and Express Scripts, how is Wegovy and Saxenda's reimbursement at this point different from each other? Or are they -- or should they be considered to be pretty much the same?

Thank you, Mark. Doug, can you comment on that, please?

Yes. So I'd start by saying it's still early days in terms of us diagnosing exactly where they're coming from. Roughly, we know it's 50-50. And I think that, as we said, our aim and ambition is to build access at least, along the lines of Saxenda, if not better than that. And the early indication with 2 major PBMs, ESI and CVS, on blocking the product, I think that's a good early indication of our market access success.

That comes from the line of Richard Vosser at JPMorgan.

Just on Wegovy, I know it's early as everyone is saying, but from your market intelligence, how much patient warehousing do you think has taken place ahead of the U.S. launch?

And maybe linked on obesity, in general, with post pandemic, the markets unlocked and people may be rushing out to reach the treatment, how much sort of bolus do you think there is from post-pandemic effects?

And then second question, just on the Delta variant and the impact on the drive to increase Rybelsus uptake. Obviously, some Delta are getting into the U.S. So just your thoughts on how that can impact your need to have face-to-face time with physicians and drive uptake in collection in Rybelsus?

So Doug, first on -- I don't know we have much insight into patient warehousing and the bolus, but I don't know what you hear from the market. And then a perspective on what a Delta variant could mean in terms of impact on Rybelsus launch and face-to-face. And maybe Camilla, you can talk to Japan, what we see there. So over to you first, Doug.

Yes. Thank you for the question. And I think -- and again, I'd go back to it's still early days, but what we do see in the early days is over 60% are naive patients to the category, to the AOM category. So that would suggest that -- listen, there's been a lot of patients. We have over 100 million patients in the U.S. that have been waiting for a step change and waiting for something. This is a societal and a health issue in the U.S. And I think that we have to assume that some of those have been waiting for the product.

I think we need to wait and see over time how this continues.

But certainly, we're encouraged by the amount of patients that we're seeing. And we see, again, as I mentioned, over 60% being naive, but it's still too early to call how much of that was bolus and I don't know that I can actually give any specificity around the warehousing component.

The only thing I'd say on Rybelsus and the face-to-face, certainly, we're watching the Delta variant. Certainly, we know that, and we've shown you a direct correlation with being able to get out in the field and a promotional responsive product as we build awareness. Face-to-face interactions with physicians are incredibly important. We still have a large footprint of representatives in the field. We're out there in full -- all of us today, 100% are out in the field. So for us, that's critically important, and we know that, that will continue to be as we move forward.

So how the Delta variant plays out, I'm not sure. I can't predict that. But certainly, with this product, we know that face-to-face is important and will continue to be. Camilla?

Yes. Thank you, Doug. And for Japan, exactly the same for launch product. The face-to-face is very important. And in Japan, we are tracking very nicely on the underlying parameters, although we've been impacted significantly by COVID-19 which has impacted our ability to see doctors from the sales force.

But the underlying parameters such as a source of business, the launch uptake, which is on par with SGLT2s, and also our share of voice is looking very, very positive. But we are currently being slightly restricted to see the doctors. But the underlying signals are good.

So we have one more question lined up. So I would like to remind you all that you can ask us questions today. So please get in line if you have more questions.

(Operator Instructions) The next question comes from the line of Keyur Parekh of Goldman Sachs.

Two, if I may. Lars, one kind of a strategic question for you and then one specifically on Wegovy.

The first on the strategic part. As you kind of see -- I think most of us can see a very good kind of runway to growth for Novo over the course of the next kind of 6 to 10 years, Lars. So would be keen to understand kind of what are your kind of objectives over the next -- over the course of the next couple of years? And what are some of the key conversations that you are having with your Board relative to kind of growth sustainability kind of beyond the 2025, 2030 time frame?

And then secondly, on Wegovy. Just wondering, Doug, if you have any kind of early feedback on the patient experience and how we should think about the stay time on the drug clearly kind of you're not going to have a numerical answer to that, but just based on early feedback and compared to the Saxenda stay time of kind of 4 to 5 months, how should we think about Wegovy stay time?

Good. Thank you, Keyur. So first, on the strategic question, it's clear that in the -- with the portfolio we have, both of marketed products but also pipeline products that we have an opportunity to have a quite attractive growth profile for the coming years. But it's also clear that a lot is riding on semaglutide. So that's a very positive situation to be and, obviously, to have a product that's derisked from a safety point of view, and is shown to have massive improvement, broadly speaking, on cardiovascular diseases. So it's a great opportunity for us.

In parallel with that, from a position of strength, we have the time needed to build growth options for, we can say, beyond the semaglutide, the time frame. So you have seen us operate on 2 strategic dimensions. One of broadening the technology platforms we operate based on. So Novo Nordisk classic is approaching engineering. We're now expanding that to also cover all administration and we're building a number of technology platforms, the stem cell-based technology platform. We have the interference RNA in a collaboration with Dicerna. We have gene editing, et cetera.

So we try to build technology exposure where we can be among the best in the world within those technologies. And then we leverage them on the second strategic dimension, which is biologies, and we pick a number of biologies where we either are leaders today or they are adjacent to areas we are in. So you can say we go from diabetes to obesity, NASH, cardiovascular disease. And you can say Alzheimer's is maybe an odd one out there, but it's such an obvious area to explore with what we have.

And you can say based on stem cell technology, we actually get exposure to biologics. We might not understand what is actually the technology that creates the opportunity, and the go-to-market is different from what we know, and we think the technology can plow through there.

And in biopharm, we are also looking for exposure across a number of rare bleeding disorders and rare endocrine disorders. So I think this is a very, say, robust strategic perspective where we move along 2 dimensions and build capability strongholds where we believe we can compete against peers in an attractive way in the industry, and thereby, build options for growth also in the coming decades.

And those discussions we have on a regular basis with the Board, and there is a strong alignment between management Board, how we go about that.

In terms of Wegovy patient experience, maybe Doug can talk a bit to that. But on stay time, I'd just like to offer my perspective. We know from Saxenda that patients stay on treatment for as long as they see a weight loss and then some drop out. And the weight loss you see is, you can say, compared to what we can offer now with Wegovy is a modest weight loss. And when you live with obesity, you have probably gone through life and put on weight -- lost weight, put on weight. So what you get with Saxenda is a modest weight loss, but it's not in the range where it's redefining your health and living up to our expectation.

We then move on Wegovy, you have an opportunity for probably the first time in your life to really lose the weight you've been aspiring to lose, and you lose that over a period of -- in the clinical trial, a bit more than a year. And we have shown in the clinical program that is exactly sustained over 2 years, which is quite unique because often, you'll start regaining weight even being on medicine. And we've also shown that if you drop out of treatment, you put the weight on.

So I think there's a significant longer stay time. And also with a redefined weight to get to, I think the encouragement to stay on treatment is completely different than it is when you have been on Saxenda. So I'm quite bold on the stay time we will eventually see for a product like Wegovy.

So that's my view. Doug, can you -- I know it's early days, and there's a lot of media out there, but what can you say about, say, the real feedback from the market and patients?

Yes. Thanks, Lars. And so Keyur, thanks for the question. And we're getting lots of feedback. So we're getting this from representatives from different means that we have, mechanisms to get this.

But again, I'll put it in the context. It's early days, but it's really, really encouraging. We're having words that are being used like wow in parenthesis. This is a game changer. We're getting information that for the first time ever, physicians are keeping spreadsheets in their offices for patients and tracking them. We're hearing details that, I'll give you one quote that patients said was the first time in their life -- ever in their life that they didn't finish their plate, which is really when you think about it, it's important.

And then we have one patient that wrote in that lost over 22 pounds already on the product. So I think we're getting great receptivity from health care providers. And what we're seeing, it's actually opening up doors for conversation with our representatives and the patient feedback has been overwhelming. So just as some anecdotal feedback that we've gotten so far. Again, early days, but all very encouraging.

Lars, perhaps if you can hear me and given there's nobody else on the queue, just interested in your thoughts on your willingness to participate with kind of the public health agencies, especially ex-U.S., to try and get kind of population level access to the product kind of ahead or just in sync with the launch.

Is that something Novo's kind of interested in doing? Is that something kind of from a reality perspective may be expected over the course of the next 6 months or so? Or is that too far ahead?

Thank you, Keyur. Yes, it's very, very good topic, as you could say. Obviously, we need product approval before we can go into detailed discussion that involves the product. But we have ongoing discussions with more than one, say, national health care system in Europe around what does it take to build a broad, say, approach to obesity. And of course, when you deal with obesity, you also have to consider prevention, you have to consider physical activity, psychological support, but all also acknowledge that for many, it's too late to address this based on prevention. It is about medical treatment.

So my short answer is, yes, we are interested in and we're already engaged in some of those conversations. It's still early days as we cannot discuss our medicines. And many of these health care systems, they are struggling. On one hand, they can see that there's a huge need. They can also see that from a health technology assessment that it's worthwhile treating. But they then on the other hand, sit with, in many cases, that 1/3 of the population is actually obese and how do you get going on this without getting into, say, a valid type situation where you lost a bit control of it?

So I think a good example is what we have done with NICE in the U.K. where you segment the population. You start with the BMI 35 and risk of developing cardiovascular disease. And clearly, you have a tremendous return on addressing that population and then you can expand from there. So that's just one example of a dialogue we have had, and there are more like that ongoing. And we're clearly committed in doing that. And I think we can -- based on our profile and our experience, and also driving change, we have programs like Cities Changing Diabetes.

We have much experience in what it means to address population health and engage in private public partnerships. And I think obesity provides a unique opportunity for us to get a seat at the table and actually become a partner with many health care systems, and bringing this knowledge to the table not only aiming for scripts. We're actually aiming at really driving real outcomes in large populations. And you can say, thereby, we're also preventing diabetes and the world-leading diabetes companies engaging actually eliminating the disease who live from, I think, in itself is building legitimacy vis-a-vis these stakeholders.

Thank you, Keyur. Are there any new questions on the line?

Yes, there are a few more questions come through. The next is from the line of Simon Baker at Redburn.

And apologies if this has already been asked because I had a running call, so I as a little bit late joining. But just continuing with Wegovy, a slightly odd question, which I wouldn't normally ask, but I wonder if you could give us any color on the regional breakdown of where those early adopters are coming from? The reason I ask is there's quite a disparity by states in terms of search engine activity for Wegovy. The most active being Alabama, Arkansas, Delaware, and South Dakota. So I was just wondering if that's being mirrored in the prescribing activity that you're seeing?

And then secondly, moving on to semaglutide in Alzheimer's. Since the Q1 call, there has clearly been an enormous development in the regulatory pathway for Alzheimer's drugs. I just wonder what your perspectives were on that from the standpoint of sema in Alzheimer's? The flexibility it potentially gives you, and the flexibility you have within the clinical trials to change any plans in light of those recent changes in the FDA?

Thank you, Simon. And I can confirm that your questions have not been asked before. So Doug, can you start by giving any perspective on regional breakdown in the initial Wegovy launch phase, where scripts are coming from?

Yes. Thanks, Simon. So we do see early days, some regional differences. I wouldn't want to get into a lot of specifics now, but I would say that some of the Southern states are showing some promise, North Carolina as well.

So there are regional differences. We do break out in all the MSAs in to a lot of analysis. So early days, but we are seeing some regional differences. But we are seeing prescriptions across the country and I think it's also important to note.

Thank you, Doug. And then Martin, a lot has happened in Alzheimer's after years of disappointments. And obviously, we have some activity in the space. So how do you see the recent regulatory developments vis-a-vis our program?

So in terms of the approval of aducanumab, maybe that is a little bit of a surprise given the data that Biogen had presented to the FDA. However, from our perspective, this is all positive. It very clearly shows that the FDA has a proactive supportive approach to bringing therapies to this very high unmet need market.

This is also what we experienced in this space. We had a very, very good and productive dialogue with both the FDA and EMA on this, and we've been allowed to design some very smooth and agile programs. Obviously, having had a demand, which is very, very fair of showing this in a prospective randomized manner.

So we see this, from a regulatory perspective, as a clear positive, very good proactive support from the regulators. But also from a clinical development perspective, this is a slightly different population. We have an earlier broader population that what Biogen does for aducanumab and what really aims for with their asset. And we have an offering that has, as Lars also alluded to, an extremely well-established safety profile across several indications, and the potential of similar or even slightly better efficacy. So again, across the board from our perspective, very, very positive.

Thanks, Martin and thanks, Simon.

That comes from the line of Simon Mather at Exane BNP Paribas.

Apologies. I was late joining the call as well. So if this question has been asked already, I do apologize. I'll get on to Wegovy, just firstly, just on the second quarter, was there any impact that you could potentially talk about with respect to stocking our shipments? Because I remember in the first quarter, there was quite a bit of stocking of Ozempic in the U.S. and there was early shipments of insulin. Just wondering if you could potentially eke that out, if that's not already been answered.

And then the second topic is kind of along the line of care with respect to European approval of Wegovy. Just a few questions, if I may, given there's not many people. Just on that, firstly, capacity constraints. I'm assuming by the time you get approved in Q4, that should have all been ironed out so there shouldn't be any issues there.

But secondly, I mean, how should we really try and think about that? You always talk about 100 million patients in the U.S. and we can track prescriptions very well there. On the ex U.S., it's slightly more difficult and the reimbursement landscape is completely different, but you're still continuing to grow. I think Q2, Saxenda is exceptionally strong growth. I mean, was that out of the pocket?

And just really trying to get a sense of the huge opportunity it could be because clearly, I think you've shown in the second quarter the pent-up demand for a really efficacious obesity drug and it could be clearly a lot, lot stronger than what you're thinking. And I think just on that basis, when do you expect to be able to update the market with respect to your outlook for the obesity sales opportunity? You obviously wanted to double it by 2025. I think consensus is around about 2023, but the run rate of Wegovy could even be sooner than that. So maybe if you could address them -- those questions, that will be fantastic.

Yes. So thank you, Simon. Karsten, if you can start by addressing any stocking in half year results in this area? And then maybe while you're at it, also comment a bit on our strategic aspiration for obesity, when and how much? And then Camilla, you can talk a bit to, as we assume we have capacity, how can one look at volumes outside of North America. So first, Karsten.

Yes. So I'd say, to take it top down, then the 12% growth we delivered in the first half of the year do have a slight benefit of phasing of shipments in IO and slightly higher wholesaler inventories in the U.S. by end of Q2. So if you have to adjust, which is always dangerous, then perhaps you should pull out 1 to 2 percentage point of growth for the first half to get to the underlying growth level but largely representative, I would say. So that was the first one.

In terms of our obesity aspiration of more than doubling compared to '19, I'd just like to start out by saying, so clearly, we are not holding back in any way and form and you see that also in Q2 and the Wegovy launch. So we are allocating resources, to a very large extent, across the value chain to maximize our opportunity in obesity. And of course, if that entails that we get there earlier than '25 or we exceed in '25, then to us, that's, of course, clearly a luxury problem. And we do everything we can to exceed what we already said.

5 weeks launch is probably not enough to really redefine what the aspiration should be. So Camilla, on what to expect outside of North America?

Yes. So in IO, most of the markets so far are generally not reimbursed obesity. Nevertheless, we see, after COVID-19, now again, a great pickup on Saxenda. So we see in the first half of this year, a 46% growth in IO in obesity, only driven by Saxenda, of course, and in the second quarter, actually even more.

So the underlying growth in obesity is very strong. And there is -- it is custom to pay out of pocket. Nevertheless, of course, there are few countries that, in recent years, have now initiated reimbursement on Saxenda. We lapped off to U.K. and NICE, and we've also seen similar things in Switzerland.

And of course, with Wegovy coming in with 3x the efficacy, it is likely that we will see more of that. Nevertheless, we still expect that there will be many out of pocket markets in IO for many years in the future to come. But a big underlying growth. So of the 650 million people living with obesity, only 100 million of them live in the U.S., so the remaining part lives outside U.S. So a great underlying potential.

That's from the line of Emily Field at Barclays.

I just wanted to follow up again on the stay time question on obesity. Is it right that Saxenda stay time was just under about half a year? And I was also curious, so then is the primary reason for discontinuation either a lack of efficacy or perceived lack of efficacy?

And then on Wegovy, how quickly, does the patient's weight return to baseline after discontinuation? And in the real-world setting, are you expecting any sort of rationing of product or spacing out of the products with patients? Or would that result in a loss of efficacy?

And then just a quick question on NovoSeven. You mentioned on the call the other day that perhaps in the U.S. that the impact of the competitor products perhaps could be, I guess, fully encapsulated maybe at this point. So -- and obviously, it was a very large growth this quarter. Are you thinking of that maybe declining or at a slower rate or perhaps kind of being more flat going forward?

Thank you, Emily. So Martin, can you start talking a bit to what do we know of stay time on Saxenda and when you look at Wegovy and stay time and if you drop out, how fast do you regain weight, perspectives around that. And then maybe, Doug, you can talk to what you see in the U.S. on NovoSeven. Do we have the full impact from HEMLIBRA back then? How do you see the latest trends?

Yes, absolutely. So maybe just recapping what Lars said, with the 3x up in efficacy as compared to what is out there and the sustainability that we've seen from STEP 5, so a sustained weight loss to a full 2 years.

Obviously, we do expect to see better stay time. We know from all of our clinical trials that the weight loss is associated with the improved quality of life. So the patients actually feel that beyond what they see in the mirror. And we can also see actually as a good indicator in our clinical trials our patients are more willing to stay in the trials and be active in the trials that what we've seen previously with other compounds.

We have a very clear answer to how fastly do we regain weight because we conducted a study called STEP 4 where we ran patients on semaglutide 2.4 milligram for 20 weeks. All patients were losing a mean of 10% of their body weight during those 20 weeks. And patients were then randomized to either switching to placebo or continuing on semaglutide. Patients continuing on semaglutide continue to lose weight during the full 68 weeks of the study. And patients who were switched to placebo started immediately to regain weight, almost returning to baseline in the following 40 weeks.

So from our perspective, the combination of STEP 4 and STEP 5, clearly indicating you get a very, very sustained weight loss staying on semaglutide and if switching to placebo in this case or stopping semaglutide, the regain of weight starts immediately. And we see this obviously as a very strong indicator that this is, at the very least, long term, potentially lifelong treatment.

Thank you, Martin. Very clear data there. Doug, NovoSeven dynamics in the U.S.?

Yes. Thank you, Emily, for the question. And I would say that HEMLIBRA, to answer your question specifically, still a good product. We do see that a lot of the impact in Hem A inhibitor space is probably behind us but it's still a competitive product, and we still believe that they'll be taking share.

In the breakthrough category, bleeding category, NovoSeven is the go-to product. I mean, as we saw in the U.S. as COVID impact declined, patients were increasing physical activity, and this led to significant bleeding episodes across all indications. And additionally, we saw patients that were resuming inpatient visits, elective surgeries, and things like that. There was a bolus of that activity as COVID declined, not necessarily sure and hard to predict if that will continue going forward. So that's how I'd characterize it.

Thank you, Doug. And you could say global NovoSeven perspective is obviously that as HEMLIBRA has been rolled out in most countries and at least the most significant countries, of course, the impact from rolling that out becomes smaller and smaller over time. And as Doug said, it's clear that NovoSeven is a go-to product when you have breakthrough bleeds, which you do see also when you are on HEMLIBRA. So thank you, Emily.

I think we have time for maybe 1 or 2 questions.

That's from the line of Steve Scala at Cowen.

And I apologize for such a basic question and one which I probably should already know the answer. But from the population-based or epidemiologic standpoint, do the causes of obesity differ geographically? So for instance, is the reason that there are obese people here in the U.S. different than the EU or Asia? And therefore, would you expect a long-term difference in the potential of Wegovy in these markets, given differences in diet, exercise, overall lifestyle and ethnicity, I would imagine there is a difference, but I just don't know what that difference is.

Thank you, Steve. I think that's a question for Martin. We do see differences across the world. So what can you say about that, Martin?

So broadly speaking, as you know, I mean, the vast majority of obesity is multifactorial, and also in part genetics, in part lifestyle. And that's obviously to do with diet and exercise.

That being said, I think it's important to understand that across the world, our clinical trial results are actually quite similar. So approximately 90% of all patients receiving semaglutide or Wegovy lose at least 5% weight, and approximately 40% of all patients lose up to 20% of body weight.

So from that perspective, really no difference. We do know that obesity, largely speaking, is related, apart from the few directly identifiable genetic diseases, this associated to -- with a sedentary lifestyle, but also obviously increased food intake. And this is what we see at a global level with very small differences, which is also why we see a very consistent response across the globe for semaglutide.

Thank you, Martin, and thank you, Steve. We have now time for the final question today.

And that's from the line of Sachin Jain of Bank of America.

Just 2 big picture for me. So midterm margins, first of all. I think at last CMD, you indicated a flattish margin structure midterm. Wegovy is clearly a high-margin product and the peak sales of it in the market that have been released on this call is a long way above your floor of DKK 2 billion. So the question is, if it ends up being a bigger product, DKK 2 billion, DKK 3 billion, DKK 4 billion, will that additional EBIT be invested incrementally in R&D or SG&A? Or do we get more margin drop-through than you had previously planned?

The second question to Lars, it's sort of back to the long-term one, and you alluded to product concentration announcement to an earlier question, and we've been fairly vocal on that topic. Your answer focused on some of the R&D angles. But I wonder if you could just touch on a couple of others as you think about it here, a long way in advance of that. So a, the importance of transferring Ozempic potentially to Rybelsus given longer-term formulation patterns? And b, whether that's required or not given your semi fixed dose combinations and whether that really is your Ozempic life cycle management with the amylin and GLP and whether you think they can deliver enough additional efficacy to offset any pricing pressure on generics?

So thanks, Sachin, for those questions. So Karsten, first on midterm margin and the benefit we get from Wegovy penetration and maybe GLP-1 generally.

Yes. Sachin, and thanks for winding back to our CMD Nordisk because that's how we continue to run the company. So as a reminder, we -- with an operating margin above 40%, then we're in the top quartile. And again, we are not adjusting for anything. So we are already in a very competitive place in terms of margin.

And then, of course, with the higher growth rate at high-margin products, that yields opportunities for either margin leverage or increased investments. And as we discussed before and also to comment around product concentration, then we see now is the right time to invest in future growth drivers for -- in the long run for Novo Nordisk. So we will be investing more, especially in R&D, but also in building the obesity market.

So right now, we are still in the early days of building the oral obesity market. So there will be increased investments in SG&A with the success of Wegovy because with the pending success, then of course, we will also be looking at our oral investment profile, which I think is actually already now pretty aggressive. But with Cagrisema coming and high-dose oral sema for obesity, I think we have good platforms to invest both in our commercial infrastructure and general market development. And then for sure, also in an R&D ratio, which is below industry average by, I'd say, some 4 or 5 percentage points.

So for us to expand and diversify our pipeline, there are also investment dollars needed. Of course, the CFO, my job is to ensure that we spend the money wisely and it's -- that we can see a return in what we're doing. So you should not be concerned about that. So with our current plans, expect us to stay with a broadly stable operating margin in the midterm.

And to the second part, and Karsten was a bit alluding to it. I think we have a unique opportunity of doing more for more patients and gaining patients much earlier and also retaining patients for longer. When you look at a product like weekly insulin, using that on top of GLP-1 treatment. If you look at glucose sensitive insulin.

So even within our core business today, I think we have some quite good place and also sustaining growth beyond semaglutide. And then we are, obviously, as I alluded to, trying to build additional franchises where there's significant unmet need and also using some disruptive technologies that lends opportunities for us to compete in completely different ways like -- based on the stem cell-based opportunity.

So we have a clear focus on maximizing the potential with semaglutide, and I think that will drive a quite interesting decade in front of us. And we have already identified, and we will be adding growth options to replenish that. And we have shown that we can take a leadership position in building new areas and also, at times, where people do not believe in therapies, we stick to them and end up bringing pretty good innovation to patients. So we remain confident in what we have in hand and our ability to also build for the long term.

On that happy note, thank you, Sachin, for your question. Thank you all for joining today. If you have further questions, do please reach out to our Investor Relations officers. We are here to make sure we can address your questions. Thank you very much, and have a great day. Bye-bye.