[News Space=Reporter seungwon lee] Novo Nordisk Pharmaceuticals (CEO Sasha Semienchuk) achieved sales of KRW 374.7 billion in 2024, recording an astonishing 63% growth compared to KRW 230.2 billion the previous year, but looking inside, the situation is not all smiles.

Despite rapid sales growth, profitability improvement is minimal, raising questions about whether the aggressive dividend policy is sustainable.

According to the audit report of the Financial Supervisory Service's electronic disclosure system on the 30th, Novo Nordisk's sales in 2024 will be 374.7 billion won, up 62.7% from the previous year (230.2 billion won). This is interpreted as being due to brisk sales of its main product, diabetes treatment, as well as steady service sales (33 billion won).

Sales increased significantly, but profitability did not improve accordingly. Operating profit in 2024 was 13.7 billion won, up 64.6% from the previous year (8.3 billion won), but it is low compared to the 140 billion won increase in sales. This is because the cost of sales (327.1 billion won) and selling and administrative expenses (33.9 billion won) increased together. In particular, commissions paid (6.5 billion won) and advertising and publicity expenses (5.7 billion won) increased significantly, eating into profitability.

It also recorded net income of 9.6 billion won. This is a 71.4% increase from the previous year (5.6 billion won). However, the company has accumulated retained earnings of 53.3 billion won, a 22% increase from the previous year (43.7 billion won).

Novo Nordisk launched the obesity treatment 'Wegovy (ingredient: semaglutide)' in Korea in October of last year. It is a GLP-1 series treatment that mimics the glucagon-like peptide (GLP)-1 hormone, which promotes insulin secretion and suppresses appetite. It is also called the 'Musk treatment' as Tesla CEO Elon Musk, who is the head of the Office of Government Efficiency in the Trump administration, took this drug and promoted it as having great effects.

Elon Musk, who appeared with a slimmer appearance after losing 14 kg, answered “intermittent fasting and Wegovy” when asked about his diet secret. Kim Kardashian also took the new diet drug “Wegovy” to wear Marilyn Monroe’s clothes and successfully lost 7 kg in a month. 

In other words, considering the sales trends of Wegovy in Korea, it is possible that there was an indirect effect. Wegovy experienced a shortage of products after its launch and sales were not smooth, but the high interest and demand may have led to increased sales of other products.

As interest in Wegovy grew, demand for other diabetes treatments in the GLP-1 analogue class (e.g. Saxenda) may have increased. In addition, as awareness of obesity treatment increased, interest in related products in general may have increased.

On the other hand, some people are raising concerns about the exaggerated advertising of the efficacy of Wegovy and the side effects. There are research results showing that symptoms such as diarrhea, constipation, vomiting, and nausea are relieved and weight is restored within a year after taking the medication. There are also research results showing that the incidence of pancreatitis or stomach disorders may increase. 

There is also criticism that the financial burden on patients is large because insurance does not apply.

A closer look at Novo Nordisk's audit report reveals several risk factors.

First, accounts receivable increased by more than three times to KRW 215.7 billion compared to the previous year (KRW 65.8 billion). This is a sign that there may be difficulties in collecting sales proceeds, which may lead to a deterioration in liquidity. Inventory assets also increased by more than two times to KRW 80.8 billion compared to the previous year (KRW 36.4 billion). This may lead to sluggish sales, increased inventory management costs, and decreased asset turnover.

A financial expert in the pharmaceutical industry pointed out that, “A simultaneous surge in accounts receivable and inventory assets can pose a serious threat to a company’s financial soundness,” and that, “Novo Nordisk Korea should not only focus on increasing sales, but also actively work to secure asset soundness.”

In particular, high accounts payable can lead to short-term financial pressure and harm management stability. Accounts payable account for the majority of current liabilities at 193.5 billion won. Stock-based compensation expenses also incurred 1.8 billion won in non-cash outflow expenses.

In other words, although it achieved remarkable sales growth in 2024, there are many issues to be resolved, such as insufficient improvement in profitability and an unstable financial structure. Whether these issues can be resolved while maintaining an aggressive dividend policy is drawing attention to future management actions.

Novo Nordisk Pharmaceuticals is being cautious, saying, "It is difficult to disclose the exact sales of Wegovy," but the industry estimates that Wegovy has indirectly contributed to improving the image of Novo Nordisk Pharmaceuticals Korea and promoting sales of other products.

Meanwhile, Novo Nordisk recently hired Kim Ji-young, a former journalist, as the head of the External Cooperation Department. She graduated from Seoul National University’s Department of Archaeology and Art History and received a master’s degree in communication from the University of North Carolina in the United States. She worked at Maeil Kyungjae and Hankook Ilbo, and previously headed the External Cooperation and Pharmaceutical Price Team at Beatrice.