Novo Nordisk shares slide

Luke Wilson (0:00)

Investors are left underwhelmed by Novo's post-Ozempic strategy. It's World Business Express from the BBC World Service. I'm Luke Wilson. China and the US talk AI ahead of a meeting between the country's leaders this week, and thousands protest in Barcelona against over-tourism and plans to expand the city's airport.

Shares in Novo, the company behind Ozempic and Wegovy, have fallen more than 5% after it set out its future growth strategy. The Danish pharmaceutical company has been struggling in recent years after its blockbuster success with weight loss drugs. Its share price has fallen by more than 30% in the past year. Novo's new CEO, Mike Doostar, told an event in London that there's work to be done.

Mike Doostar (0:49)

We are very, very proud that 46.5 million people wake up every single day using one of our products. And while we are proud of the number 46.5 million, these are billions. The gap is incredibly large and we need to somehow close the gap. We need to work harder and we will.

Luke Wilson (1:10)

But investors don't seem reassured. I asked Victor Freming, who covers Novo for the Norwegian investment bank, ABG Sundial Collier, why?

Victor Freming (1:19)

Over the time, Novo has progressed or recalibrated to more of an obesity company who focused on obesity products. They were the first movers to get one of these products approved. And after that, a lot of competition has gone their way. Their closest rival, Eli Lilly, has overtaken them as the big obesity company. And a lot of big pharma as well is getting closer. So Novo has gone from the clear number one to struggling a bit because they no longer have the only product or the best product on the markets.

Luke Wilson (1:56)

And we're seeing the share price fall today. Why don't investors seem to like it very much?

Victor Freming (2:02)

I think the main problem and the main focus today is that these strategic ambitions, as Novo calls them, they outline for today, is a bit too vague. And Novo says that they want to grow in line with their peers.

So if you take revenue growth for Big Pharma expected going into 2030, it will be something like 4-5% a year. So with that, we can say, okay, this is no longer a super growth story. This is a low growth company. And also they haven't been so specific on how do we actually bridge the gap there is.

Luke Wilson (2:41)

And going forward for Novo, do you think the best growth strategy for them is to look elsewhere in health care or try and regain that sort of market leading position they've had in weight loss?

Victor Freming (2:51)

They need to look elsewhere, but they could either do it internally, focusing on R&D, take some risk there as well to get the next blockbuster. But they can also look externally and do some M&A. But again, we don't know how big is transformative. They don't give us that much specification here. So that is the problem bottom line.

Luke Wilson (3:14)

Victor Freming from ABG Sundau Collier. Germany's Chancellor Friedrich Merz has called his party's performance in state elections a disaster, and there are rumours he could be replaced as the country's leader. Rachel Winter is partner and investment manager at Killik & Co. Are there any signs investors are worried about that, Rachel?

Rachel Winter (3:31)

Not yet, actually. Markets are looking quite calm. We haven't seen a big move in government bond markets. And we also haven't seen a big move in German equities. The main German index is called the DAX. We haven't seen a big move there, but that's partly because the German economy is quite different to this German index. A lot of the companies inside the DAX are very international, and therefore they're not overly impacted by German politics.

Luke Wilson (3:54)

Bad market news for the German carmaker Volkswagen, though, as it drops out of the Euro stocks 50, Rachel?

Rachel Winter (4:00)

Yes, this really caps off a very bad few years for Volkswagen. They've obviously had the diesel gate scandal. They've been hit by competition from cheap Chinese vehicles. That's caused their share price to come down a lot. The shares are actually down about 75% over the past five years, and the company is no longer big enough to be in the all-important Euro stocks index.

Luke Wilson (4:20)

Rachel Winter from Killik & Co. Thank you. The United States and China have agreed to set up a dialogue on artificial intelligence ahead of a summit later this week between Donald Trump and Xi Jinping. US. Treasury Secretary Scott Besson said the two sides discussed a new notification mechanism for AI incidents posing threats to national security. Our China correspondent Laura Bicker said we can expect AI to be a big part of the talks between the two leaders.