Novo Nordisk is discovering that unprecedented success can have adverse side effects. 

The Danish pharma giant’s share price fell over 8% on Wednesday after the company reported lower-than-expected sales of Wegovy, one of the hottest drugs of the century. And the problem isn’t just that Novo Nordisk can’t make it fast enough. 

Medicare to explain?

The company has long dealt with shortages for its incredibly popular weight-loss drug. What’s new is that a lot more people can afford it. The injectable drug is increasingly available via Medicare in the US, and is now offered via Medicaid in 20 different US states, Novo Nordisk said Wednesday. Also, more and more commercial insurers are adding coverage for Wegovy after previously covering only its counterpart, Ozempic, for patients battling diabetes. The upshot: Wegovy’s weekly prescriptions have hit 200,000, up from 100,000 at the beginning of the year, CFO Karsten Munk Knudsen said Wednesday. But that’s come at a cost.

With more insurers including Wegovy, Novo has faced a complex web of rebates, leading to higher-than-expected price concessions to pharmacy benefit managers. That’s in addition to ongoing supply chain constraints and increasing price pressure from emerging competition, particularly Eli Lilly’s Zepbound. All of this is eating into Novo Nordisk’s bottom line:

• Sales of Wegovy hit 11.7 billion Danish kroner in the quarter (around $1.71 billion), missing estimates of 13.5 billion kroner. US sales accounted for 9.9 billion Danish kroner, around 12% short of a Barclays estimate. Overall sales were still up 55% year-over-year.
• Knudsen insisted the disappointment was nothing more than a “quarterly blip.” Still, the company announced a downward revision of its operating profit growth: between 20% and 28%.

Selling Yourself Short: Wegovy’s supply constraints are easing. Somewhat. The drug comes in doses of five different strengths, and only the introductory dosage remains on the US Food and Drug Administration’s official shortage list. To ensure that everyone who starts the drug has enough starter-level doses before graduating to the next stage, CEO Lars Fruergaard Jørgensen said the company will continue to limit supply — for now, at least.

Eli Lilly saw its own weight-loss drug Zepbound finally escape the shortage list this week, and this morning its earnings revealed an upsurge in sales. Now, the pharma player is taking steps to ensure its next blockbuster drug isn’t hit by any supply shortfalls. On Wednesday, Eli Lilly announced it has invested $10 million into isotope supplier Ionetix, which makes a key component of many cancer-fighting radiopharma drugs, also in short supply today. 

US regulators are accusing big banks of not doing enough to protect consumers from the cyber scammers who are helping themselves to others’ electronic cash. 

JPMorgan Chase, Bank of America, Wells Fargo, and other major US banks are being probed by the Consumer Financial Protection Bureau (CFPB) over how they handle fraud on P2P payments app Zelle.

Sam-I-Am, I Would Not Cheat for Greenbacks with Spam 

Owned by a consortium of seven of America’s biggest banks, Zelle was launched in 2017 to compete with the likes of PayPal-owned Venmo and Cash App. With over 2,100 partner financial institutions, it handled 2.9 billion transactions last year worth $806 billion, increasing 28% from 2022.

But just as the P2P app sector has grown, so too have the scams. According to FTC data, there were 65,000 fraud reports related to payment apps last year involving $210 million in losses, up 28% from $163.5 million in 2022. Whether the major banks are doing enough about the Zelle issue is now a point of contention with regulators and legislators:

• A Senate investigation into Zelle, released last month, found that JPMorgan, BoA, and Wells Fargo reimbursed customers in just 38% of fraud disputes, leaving $100 million in limbo. That’s far less than the 62% they reimbursed in 2019. A bill introduced last week by Sens. Richard Blumenthal and Elizabeth Warren would make financial institutions share liability when consumers are defrauded into authorizing transfers.
• Zelle’s parent, Early Warning, said that 99.95% of transactions are carried out without reports of fraud or scams. That was apparently not enough to assuage the CFPB’s concerns — JPMorgan disclosed last week that it was responding to inquiries from the agency, and The Wall Street Journal reported Wednesday that the probe will expand to BoA, Wells Fargo, and others (Early Warning’s other owners are Truist, Capital One, PNC Bank, and U.S. Bank).

Tip of the Iceberg: Beyond just P2P payment apps, the FBI said it received reports of $12.5 billion in online scams last year, a 22% increase from 2022. However, the agency was careful to describe this figure as a “conservative” window into the scale of the problem: When the FBI infiltrated the major ransomware group Hive, it found that just 20% of its victims had made reports to law enforcement.

Europe’s boot just put its foot down regarding wealthy migrants. 

Italy doubled a flat tax on the foreign income of new residents, upping it from €100,000 to €200,000 annually. 

When in Rome

One way for the rich to lighten their tax bill is by claiming their tax domicile in a new country with lesser tax burdens. And Italy wanted them to feel right at home. 

In 2016, the nation launched an attractive tax on money made outside the country by new, high-net-worth residents. €100,000 a year ain’t a lot when you’re making millions, if not billions:

• The strategy — often referred to as “the footballer’s scheme” after Portuguese forward Cristiano Ronaldo moved to Turin in 2018 — has brought in at least 2,730 millionaires, the Financial Times reported. Plenty of private-equity fund managers from the UK have also moved or are planning to move to Italy to avoid higher rates in their home countries, according to Bloomberg.
• But both public outcry over the rich migrants who’ve caused the cost of living to go up in cities like Milan and the country’s roughly $3 trillion in national debt pushed the Italian government to bump up the tax. The increased levy will only extend to new, wealthy migrants; everyone else is grandfathered into the old rate.

Death and Taxes: Italy’s neighbor to the north also has a plan to put more pressure on its super-rich residents. Switzerland is currently debating whether to put a 50% tax on inheritance above 50 million francs ($59 million). The measure would surely affect the dozens of wealthy Norwegians who fled the fjords for the Alps after Oslo increased the country’s wealth tax to 1.1% in 2022.