Novo Nordisk beat its first quarter profit expectations and reported more than $4.5 billion USD in revenue.
👉 Background: Novo Nordisk is a Danish pharmaceutical company that’s been kicking around since 1923. In 2017, Novo Nordisk developed a diabetes drug called Ozempic, which helped people manage Type 2 diabetes but at the same time, It helped people lose bucket loads of weight. Following this weight-loss side affect the company blew up in popularity.
👉 What happened: Despite all the expectations in the world, Novo Nordisk beat its first quarter profit expectations and reported more than $4.5 billion USD in revenue. The crazy part was they could have generated more revenue but were limited by a lack of supply.
👉 What else: As a result of the high demand, competitor brands like Eli Lilly have developed similar weight-loss drugs to fill the demand. And this has forced Novo Nordisk to drop their drug prices after price skimming for a little while.
💡Price skimming is a strategy where a company initially charges high prices for a unique product. The goal is to maximise early profits when there is little competition.
💡And Novo Nordisk was able to successfully use this strategy for the first few years. But now, with competitors like Eli Lilly entering the race, it has shifted the market landscape.
💡These new competitors often undercut their prices to attract customers and this leads to a more competitive pricing environment.
Sign up for Flux and join 100,000 members of the Flux family
