Earnings Call Transcript
NOVO NORDISK A S (NVO)
Earnings Call Transcript - NVO Q2 2023
Operator, Operator
Good day, and thank you for standing by. Welcome to the Q2 2023 Novo Nordisk A/S Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Daniel Bohsen, Head of Investor Relations. Go ahead.
Daniel Bohsen, Head of Investor Relations
Thank you. Welcome to this Novo Nordisk earnings call for the first 6 months of 2023 and the outlook for the year. My name is Daniel Bohsen, and I'm Head of Investor Relations at Novo Nordisk. With me today, I have CEO of Novo Nordisk, Lars Jorgensen; Executive Vice President and Head of Commercial Strategy and Corporate Affairs, Camilla Sylvest; Executive Vice President and Head of North America Operations, Doug Langa; Executive Vice President and Head of Development, Martin Lange; and finally, Chief Financial Officer, Karsten Knudsen. All speakers will be available for the Q&A session. Today's announcement and the slides for this call are available on our website, novonordisk.com. Please note that this call is being webcast live and a recording will be made available on our website as well. The call is scheduled to last approximately 1 hour. Please turn to the next slide. The presentation is structured as outlined on Slide 2. Please note that all sales and operating profit growth statements will be at constant exchange rates unless otherwise specified. Please turn to the next slide. As always, we need to advise you that this call will contain forward-looking statements. These are subject to risks and uncertainties that could cause actual results to differ materially from expectations. For further information on the risk factors, please see the company announcement for the first 6 months of this year and the slides prepared for this presentation. With that, over to you, Lars, for an update on our strategic aspirations.
Lars Jorgensen, CEO
Thank you, Daniel. In the first 6 months of 2023, we delivered 30% sales and 32% operating profit growth, which has enabled us to raise our outlook for the full year. I would like to start this call by going through the performance highlights across our strategic aspirations before handing over the word to my colleagues. Within Purpose and Sustainability, we're going to make progress across all dimensions. Our carbon emissions decreased by 28% compared to pre-pandemic levels in 2019. In line with our aspiration of being a sustainable employer, we continue to expand the number of women in senior leadership positions. This is now 40% compared to 38% last year. Within R&D, we are encouraged by the many Phase III readouts with semaglutide in obesity. We are very pleased with the results of the recently completed cardiovascular outcomes trial SELECT. SELECT is the largest trial ever undertaken by Novo Nordisk and the results establish semaglutide 2.4 milligram as the only anti-obesity medication with proven cardiovascular benefits. We are committed to drive change in obesity and believe that the SELECT trial with semaglutide 2.4 milligram underlines the importance of recognizing obesity as a serious chronic disease. We believe the benefits of semaglutide on major adverse cardiovascular events in this population will not only be a big difference for patients but also add value to society. Martin will come back to this and our overall R&D milestones later. The quarter sales growth reflects strong commercial execution across operating units. Both operating units contributed to sales growth, driven by increasing demand for GLP-1 based diabetes and obesity treatments. The performance in the first 6 months has enabled us to raise the outlook for the full year. Camilla and Doug will go through the details for the therapy area later. Karsten will go through the financials, but I'm very pleased with the performance for the first 6 months of 2023. With that, I'll give the word to Camilla for an update on execution.
Camilla Sylvest, Executive Vice President, Head of Commercial Strategy and Corporate Affairs
Thank you, Lars. In the first 6 months of 2023, our total sales increased by 30%. The sales increase was driven by both operating units with North America Operations growing 44% and International Operations growing 17%. Our GLP-1 sales increased by 50%, driven by North America growing 44% and International Operations growing 62%. Insulin sales decreased by 7%, driven by a 2% decline in International Operations and by a 25% sales decline in North America Operations. The sales decline was driven by declining sales in the U.S., in Region China and EMEA. Obesity sales grew 157% overall. In International Operations, sales grew 66%, driven by both Saxenda and Wegovy. In addition to Denmark and Norway, Wegovy has now also been launched in Germany. In North America Operations, Obesity Care sales grew 207%. Sales of Wegovy increased by 344% in the U.S., reflecting the performance since the commercial relaunch in January 2023. Total Rare Disease sales decreased by 18%, driven by a 17% decrease in International Operations and by an 18% decrease in North America Operations. Rare Endocrine Disorders sales were impacted by a temporary reduction in manufacturing output. With 24% sales growth in our Diabetes Care, we are growing faster than the total diabetes market, improving our global diabetes value market share over the last 12 months to 32.7% from 31%. This is in line with the aspiration of strengthening the Diabetes Care leadership, aiming at reaching a global value market share of more than 1/3 in 2025. The increase primarily reflects GLP-1 market growth as well as share gains in both operating units. In International Operations, total Diabetes Care sales increased by 20% in the first 6 months of 2023. This was driven by GLP-1 sales growing 62%. Novo Nordisk is the market leader in International Operations with a GLP-1 value market share of 67%. Ozempic continues its GLP-1 market leadership with around 45% market share. We're also pleased to see Rybelsus increasing its market share to just shy of 11%, driven by strong uptake across geographies. And with that, I would hand over the word to Doug.
Doug Langa, Executive Vice President, Head of North America Operations
Thank you, Camilla. The U.S. GLP-1 market volume grew more than 60% comparing Q2 of 2023 to Q2 of 2022. The volume growth acceleration is driven by a substantial increase in new patients initiating therapy with our portfolio of GLP-1 products, Ozempic and Rybelsus. Obesity Care sales increased by 157%, mainly driven by the U.S. due to a strong Wegovy uptake and continued demand for Saxenda. The global branded obesity market expansion continues with a global volume growth of around 76%. In International Operations, Obesity Care sales are driven by a strong Saxenda performance and the Wegovy launches in Denmark and Norway. We anticipate a continuation of the gradual rollout of Wegovy in International Operations, which now includes Wegovy launches in Denmark, Norway, and Germany. In the U.S. alone, sales of Wegovy grew by 344% and we continue to see overwhelming demand for Wegovy. While supply capacity is gradually being expanded, the supply of the lower dose strengths will remain restricted to safeguard continuity of care. Our Rare Disease sales decreased by 18%, driven by Rare Blood Disorder sales decreasing 1% and Rare Endocrine Disorder sales declining 46%. Norditropin sales were impacted by a temporary reduction in manufacturing output. Now over to Martin for an update on R&D.
Martin Lange, Executive Vice President, Head of Development
The obesity epidemic affects more than 750 million individuals and is associated with more than 200 possible health complications, including cardiovascular disease, which is the leading cause of death globally. Obesity, therefore, has a profound impact on individual patients and the outcomes, but also a substantial impact on society and health care spending. No pharmaceutical weight management intervention has to date demonstrated improvement in patient cardiovascular outcomes. Besides significant weight loss, semaglutide has shown benefits in a wide array of biomarkers associated with cardiovascular risk. This has been seen with the STEP development program. This includes improvements in blood pressure, dyslipidemia, HbA1c, and inflammatory markers. These observations support observations from diabetes where semaglutide treatment has been demonstrated to be associated with a 26% reduction in risk of experiencing a major adverse cardiovascular event, or MACE. To investigate the potential impact of semaglutide in patients with obesity on reduction in risk of major adverse cardiovascular events, Novo Nordisk in 2018 initiated the SELECT trial. SELECT was a large-scale outcomes trial and was conducted across 41 countries and more than 800 sites. 17,604 patients were enrolled and randomized in a 1:1 ratio to receive once-weekly semaglutide 2.4 milligram or placebo. The eligibility criteria were designed to include a broad population with overweight obesity and established atherosclerotic cardiovascular disease as defined by prior myocardial infraction, stroke, or peripheral artery disease. Patients with a prior history of diabetes were excluded. The primary objective was to demonstrate superiority of semaglutide 2.4 milligram versus placebo on top of standard of care for prevention of the primary endpoint. This consisted of major cardiovascular events, including cardiovascular death, nonfatal myocardial infarction, or nonfatal stroke. Key secondary objectives were to compare the effects of semaglutide 2.4 milligrams versus placebo with regards to mortality, cardiovascular risk factors, glucose metabolism, body weight, and renal function. I'm very excited to announce that SELECT achieved its primary endpoint and once-weekly semaglutide 2.4 milligram demonstrated a 20% reduction in major adverse cardiovascular events versus placebo. All components of the primary endpoint contributed to the overall cardiovascular risk reduction. The result from this SELECT trial establishes semaglutide 2.4 milligram as the only anti-obesity medication with a proven cardiovascular benefit in a population with overweight or obesity and established cardiovascular disease without prior history of diabetes. We believe that the cardiovascular risk reduction demonstrated with semaglutide 2.4 milligram in SELECT holds immense value for patients and caregivers, the scientific community as well as society at large and that these results for semaglutide have the potential to fundamentally change how obesity is regarded and treated. In the trial, semaglutide 2.4 milligram appears to have a safe and well-tolerated profile, in line with previous trials investigating semaglutide. We aim to share the full SELECT results at the American Heart Association Congress in 2023 and expect to file for regulatory approval of a label indication expansion for semaglutide 2.4 milligram later this year. Building on the potential of broader cardiovascular benefits for semaglutide, Novo Nordisk initiated the STEP HFpEF trial to investigate the impact of semaglutide treatment on physiological function in patients with obesity and established heart failure. Heart failure with preserved ejection fraction or HFpEF affects half of the estimated 65 million patients with heart failure globally. Around 80% of HFpEF patients have overweight or obesity, which significantly contributes to the disease's pathophysiology. Individuals with obesity-related HFpEF have a high risk of mortality and morbidity and experience a considerable burden of debilitating symptoms and functional impairment. Improving these outcomes is a major goal of management, and very few treatment options are available. In the STEP HFpEF trial, 529 patients with obesity-related HFpEF and no prior history of diabetes were randomized in a one-to-one manner comparing semaglutide 2.4 milligram with placebo when both were added to standard of care. The primary endpoint was the average change from baseline in the Kansas City Cardiomyopathy Clinical Summary Score Questionnaire and body weight. Key secondary endpoints included the 6-minute walking test, a composite hierarchical endpoint, including hard outcomes, and high-sensitivity C-reactive protein. In the trial, semaglutide showed a 16.6 points improvement versus 8.7 points in the placebo arm at week 52. The mean change was thus 7.8 points in favor of semaglutide, which is considered a clinically relevant and very strong result within chronic heart failure. I would like to also touch upon the headline results from OASIS 1. OASIS 1 was a Phase IIIb trial with once-daily oral semaglutide 50 milligram. The trial design details are on the slide. Overall, patients who received oral semaglutide 50 milligram achieved a statistically significant weight loss of 17.4% after 68 weeks of treatment compared to 1.8% with placebo. The results are comparable with the weight loss demonstrated in step 1 with injectable semaglutide 2.4 milligram and will give patients and caregivers an opportunity for individualized treatment. In line with our business development strategy in obesity focused on either technology platforms or early- to mid-stage assets, we are pleased to announce the acquisition of Inversago Pharma. Inversago Pharma is focused on the development of a cannabinoid receptor 1 inverse agonist which is designed to help people with obesity, diabetes, and complications associated with metabolic disorders. The acquisition includes the lead asset, INV-202, an oral cannabinoid receptor-1 inverse agonist, designed to preferentially block cannabinoid receptors in peripheral tissues only. INV-202 demonstrated promising results in terms of weight loss in a Phase Ib trial and is currently in clinical development for diabetic kidney disease.
Karsten Knudsen, CFO
In the first 6 months of 2023, our sales grew by 29% in Danish kroner and 30% at constant exchange rates, driven by both our operating units. The gross margin increased by 85.1% compared to 84.4% in 2022. The increase is driven by a positive product mix, reflecting increased sales of GLP-1-based treatments and a positive currency impact. This is partially countered by costs related to the ongoing capacity expansions as well as lower realized prices, mainly in the U.S. and Region China. Sales and distribution costs increased by 27% in Danish kroner and by 28% at constant exchange rates, driven by both operating units. In North America Operations, the cost increase is driven by the relaunch of Wegovy and promotional activities for Ozempic, while in International Operations, the cost increase is driven by promotional activities for Rybelsus as well as Obesity Care market development activities. The increase in sales and distribution costs are impacted by adjustments to legal provisions. Research and Development costs increased by 34% in both Danish kroner and at constant exchange rates. The increase is driven by higher late-stage clinical trial activity and increased early research activities compared to the first 6 months of 2022. The acquisition of Forma Therapeutics in 2022 also impacted costs. Administration costs increased by 9% measured in Danish kroner and by 10% at constant exchange rates. Operating profit increased by 30% measured in Danish kroner and by 32% at constant exchange rates, reflecting the sales growth. Net financial items showed a net gain of DKK 96 million compared to a net loss of around DKK 2.8 billion. The effective tax rate was 19.9% in the first 6 months of 2023 compared to 20.7% in the first 6 months of 2022. Net profit increased by 43% and diluted earnings per share increased by 44% to DKK 17.41. Free cash flow was DKK 45.5 billion compared to DKK 42 billion in 2022, supporting the strategic aspiration to deliver attractive capital allocation to shareholders. The cash conversion is positively impacted by the timing of payment of rebates in the U.S. This includes provisions related to the revised 340B distribution policy in the U.S. Note that income under the 340B Program has been partially recognized. Capital expenditure for property, plant, and equipment was DKK 10.6 billion compared to DKK 4 billion in 2022. This primarily reflects investments in additional capacity for active pharmaceutical ingredient production and fill-finish capacity for both current and future injectable and oral products. A key priority for Novo Nordisk is to ensure attractive allocation of capital to shareholders. For 2022, the dividend per share increased 19.2% to DKK 12.40. For 2023, the Board of Directors has decided to pay out an interim dividend of DKK 6 per share, which will be paid out in August this year. In line with our strategy, we have returned more than DKK 32 billion to shareholders in the first half during dividends and ongoing share repurchase program, which is up to DKK 30 billion for the full year. To secure liquidity for both the Novo Nordisk B shares and American Depository Receipts, the Board of Directors has decided to split the share in a 2:1 ratio in September 2023. Midway through 2023, we are continuing our sales growth momentum, which has enabled us to raise the outlook for the full year. We now expect the sales growth to be between 27% and 33% growth at constant exchange rates. This is based on a number of assumptions as described in the company announcement. The guidance reflects expectations for sales growth in both North America Operations and International Operations, mainly driven by volume growth of GLP-1 based treatments for Diabetes and Obesity Care, partially countered by declining sales in Rare Disease due to a temporary reduction in manufacturing output. The guidance reflects the level of volume growth of GLP-1-based diabetes treatment and the inherent uncertainty of the pace of the Obesity Care market expansion. Following the relaunch of Wegovy in the U.S. and the limited rollout in International Operations, the outlook also reflects expected continued periodic supply constraints and related drug shortage notifications across a number of products and geographies. We expect that operating profit growth will be between 31% and 37% at constant exchange rates. This primarily reflects the sales growth outlook and continued investments in current and future growth drivers within R&D and commercial. For 2023, we expect net financial items to amount to a gain of around DKK 2.8 billion, mainly reflecting hedging gains associated with foreign exchange hedging contracts. Capital expenditure is still expected to be around DKK 25 billion, reflecting investments in additional capacity for active pharmaceutical ingredients and fill-finish capacity for both current and future injectable and oral products. The free cash flow is now expected to be between DKK 64 billion and DKK 72 billion, reflecting the sales growth, a favorable impact from rebates in the U.S., and investments in capital expenditure. This covers the outlook for 2023. Now back to you, Lars, for final remarks.
Lars Jorgensen, CEO
Thank you, Karsten. We are very satisfied with the sales growth in the first 6 months of 2023. The growth is driven by increasing demand for GLP-1 based diabetes and obesity treatments, and we're serving more patients than ever before. The performance in the first 6 months has enabled us to raise the outlook for the full year. Within R&D, we are very excited about the results from the SELECT trial. Obesity is a serious chronic disease associated with many comorbidities, and the results from SELECT demonstrate the comorbidities associated with the condition can be significantly reduced by treating people with semaglutide 2.4 milligram. With that, I would like to hand over the word to Daniel.
Daniel Bohsen, Head of Investor Relations
Thank you, Lars. We're now ready for the Q&A session. I kindly ask all participants to limit themselves to one or a maximum of two questions. Operator, we are now ready to take the first question.
Operator, Operator
And your first question comes from the line of Martin Parkhoi from SEB.
Martin Parkhoi, Analyst
Yes. Martin Parkhoi, SEB. First one question for Martin on the SELECT data actually related to CagriSema. Will it be possible to utilize fully or partly SELECT data in a potential labeling of CagriSema? And then second question is also on CagriSema, maybe to Karsten and Lars. Of course, you're building up the option, hopefully, every day. But respect to the PIN for the device for CagriSema, do you think you will be able to have a commercially acceptable amount of scale of production of the PIN of CagriSema at the time of launch or the time of approval, I mean, of course?
Lars Jorgensen, CEO
Thank you, Martin, for these questions. So Martin, if you start with CagriSema and SELECT.
Martin Lange, Executive Vice President, Head of Development
Thank you very much, Martin. Obviously, it's something that we also discussed. I have to say that CagriSema is a couple of years down the road, so it's probably too early to speculate what we cannot do in terms of regulatory interactions. I think it's important to call out that for CagriSema, we're also doing redefined development. So CagriSema will have in and of itself cardiovascular data. But obviously, we are super excited for that outlook as well given the SELECT data.
Karsten Knudsen, CFO
And Martin, to your question around scaling of CagriSema. Our starting point is that we see the dynamics in the obesity market now and the significant unmet needs, and that is also what is informing our supply chain strategies and scaling and preparation of CagriSema launch and also the elevated CapEx level that you're seeing in our guidance this year.
Operator, Operator
We will now go to our next question. And your next question comes from the line of Richard Parkes from BNP Paribas.
Richard Parkes, Analyst
Firstly, I wondered if you could talk about your thoughts over commercial access in the U.S. going into 2024? There have been a few reports of payers restricting access or increasing co-pays due to the extent of current strong demand. So I'm just wondering how you're seeing it from a holistic perspective. And do you think you can leverage the SELECT results to impact that immediately? Or will you have to wait for a label update to influence your discussions with commercial payers? Then the second question, I just wondered if you could walk us through the timelines of how results of SELECT could influence potential legislative change in Medicare. Is that something that you can straightaway start to lobby for? Or do we again need to wait for label updates?
Douglas Langa, Executive Vice President, Head of North America Operations
Thank you, Richard. For the first question regarding access, we are pleased with the current level we have and are continuing to improve it. All major pharmacy benefit managers are covering it now, providing access to over 45 million people, with 80% of them paying less than $25. This is an important point. Regarding SELECT, we are still lacking access to Medicare, and while SELECT may not change that immediately, it does enhance the value of semaglutide. In the long run, it will likely be challenging for anyone to limit access to this remarkable medication and its life-saving benefits. We are satisfied with our current access and will keep working to expand it.
Operator, Operator
We will now go to our next question. And your question comes from the line of Emily Field from Barclays.
Emily Field, Analyst
I'll ask two. The first is, there's been some attention to reports in the U.S. media about stay-time for Wegovy for a majority of patients potentially being less than a year. Do you have any updates on sort of your own data? Or what you're expecting for Wegovy stay-time? And then secondarily, could you just remind us of your targets for the supply ramp for Wegovy for the end of 2023 versus the end of 2022?
Lars Jorgensen, CEO
Doug, if you will take the first one on what we see on stay-time. And Karsten, you will take the Wegovy ramp-up this year.
Douglas Langa, Executive Vice President, Head of North America Operations
I'd start with, there's still too few data points to conclude on Wegovy stay-time. We're really going to have to wait until 2024. I would say though we are looking at some of the early snapshots data that we see from payers and databases. But again, it's really too early to conclude on stay-time.
Karsten Knudsen, CFO
Yes, Emily, scaling the supply of Wegovy is a top priority for us due to the significant unmet need we observe. Regarding the single-dose platform we are using in the U.S., we started this year with one CMO filling line. During the first half, we added another line and are on track to add a third CMO filling line as we approach 2024. Additionally, we will be increasing our filling line capacity, indicating a substantial increase in Wegovy capacity over time. It's also important to mention that we are utilizing our major platforms, including our in-house cartridge filling and FlexTouch platforms, for our European Wegovy launches, thereby creating more options for deploying Wegovy in the future. Lastly, concerning scaling, our CapEx program of DKK 25 billion demonstrates scaling in both peptide API and fill-finish capacity.
Operator, Operator
Your next question comes from the line of Peter Verdult from Citigroup.
Peter Verdult, Analyst
Yes, Peter Verdult, Citi. Two questions for Martin on SELECT and the CB1 asset you acquired today. Martin, I realize you can't go into very much detail on SELECT, but are you at least able to characterize qualitatively the strength of the data with respect to any of the key secondary endpoints as well as reassure us that when we see that data at AHA on the primary endpoint, we're not going to be tripped up by any subgroup analysis showing regional efficacy differences or any forthcoming concerns? And then secondly, on the CB1 inverse agonist. I mean, can you just sketch out what's different here from both an efficacy and a safety perspective? I thought from memory on about 5 kilos of weight loss, and there were big safety concerns around suicide. So what's different here? When could Phase III start? How does Novo want to position this asset relative to your existing obesity portfolio?
Lars Jorgensen, CEO
Yes. So Martin, on SELECT totality of data and then on safety of our new asset from Inversago.
Martin Lange, Executive Vice President, Head of Development
You're right about SELECT, and while I can't share too much detail, we disclosed that for the primary endpoint, the individual components of myocardial infarction, stroke, and cardiovascular death all contributed to our estimates. This suggests a level of consistency in the primary endpoint that gives us confidence, which may also extend to the secondary endpoints, though we will delve into that data at the American Heart Association later this year. Regarding Inversago, we also reviewed historical data, and it's important to note that the CB1 approach has typically focused on the brain, which resulted in negative effects from past methods. With the INV-202 molecule, we are observing primarily peripheral activity, designed to minimize brain interaction while maximizing impact in peripheral tissues. In the clinical setting, we are seeing efficacy that surpasses what was previously described for the historical compounds, and the safety profile, at least in a smaller setting, seems to have been improved based on the design. However, we acknowledge that we need to further mitigate risks throughout our development process. The next phase will involve investigating this in Phase II, focusing on monotherapy, as we believe the compound has potential in that area, while also considering its use in combination with other treatments.
Operator, Operator
And your next question comes from the line of Sachin Jain from Bank of America.
Sachin Jain, Analyst
Sachin Jain, Bank of America. Two questions on Wegovy supply, if I may. So Karsten, thanks for the updates on supply. It sounds like everything is on track. So I'm trying to understand the driver of the vague language you've used. So just very simply, is there still uncertainty or issues with supply such as timing of the second Catalent facility, or speed of the second CDMO ramping? Or is this simply demand uncertainty post SELECT? And then secondly, just as we're all trying to model Wegovy for the second half, what color can you give us on how you've dynamically managed supply? Should we be expecting a supply increase in the second half at any point? I guess what I'm trying to get a sense of is when you change the wording on the U.S. supply website, which isn't updated yet, what are you going to say, assuming you want to give some visibility relative to your prior September commentary?
Karsten Knudsen, CFO
Again, it's important to note that this all starts with a very substantial demand driven by the unmet patient need in the U.S. and the rest of the world. That is, of course, what we're scaling our supply chain to as a top priority, as I alluded to before. The language in the company announcement should not be understood as we are uncertain about our supply to the market. Our supply is rolling according to plans in terms of getting the new lines on track. We have a supply plan which has been shared with our commercial colleagues. There are some uncertainties about what dose strengths are being utilized in the specific markets. The responsible way to manage this as a company is that patients starting on Wegovy should be able to titrate up to the 2.4 milligram dose and achieve the benefits that we showed in the STEP program of up to 17% weight loss. The best way to do that is to not start more patients than we can secure continuity of care. We expect that to continue to be the case.
Operator, Operator
Your next question comes from the line of Richard Vosser from JPMorgan.
Richard Vosser, Analyst
Just coming on to SELECT and some of the safety concerns you've seen with regulators and the press around Wegovy, suicides, thyroid cancer, and a couple of those. What have you seen in SELECT around those issues? What do you have in your own adverse event databases that could be used to address these concerns from our side? Then secondly, just thinking about the legal provisions that you alluded to, increasing SG&A. Are they due to your litigation against the counterfeit producers or anything else you could say on those?
Lars Jorgensen, CEO
Martin, you take the SELECT. Karsten, you take legal provisions afterwards.
Martin Lange, Executive Vice President, Head of Development
As you know, safety is very high at the top of our agenda, and we do that for all of our compounds. You also know that, broadly, GLP-1 has been on the market for 15 years in diabetes, and 8 years in obesity. We have a huge safety database across GLP-1 companies, as obviously also collected by the authorities. SELECT, due to its size, can almost stand alone in most safety assessments. I think it's fair to say that SELECT supports our broad assessment of the attractive safety profile of semaglutide and the broader GLP-1 approach, including when looking at some of the issues that have been in the media in recent months. We take a lot of comfort from being able to add the SELECT data to the data pool.
Karsten Knudsen, CFO
It's standing operating procedure that every quarter, we assess our portfolio of ongoing litigations and look at our exposure there, then update our legal provisions. Sometimes some provisions go up, sometimes they go down. What we say here is that we have increased our provisions based on the current standing of our ongoing litigations, as described in the annual report in detail and the subsequent company announcements. We're not really able to comment on ongoing litigations and specifically on provisions related to that.
Operator, Operator
And your next question comes from the line of Michael Leuchten from UBS.
Michael Leuchten, Analyst
Two questions, please. You obviously called out a meaningful rebate adjustment for Rybelsus in the quarter, but there's also some language in the press release around wholesale stocking. Just wondering how meaningful was that stocking effect in the second quarter, if at all? And then, I'm very sorry to go back to the supply question, but just following from Sachin. Will you or will you not be able to start supplying the lower doses from September? I think the question we all have is whether you will be able to come back to patients at a lower dose in September or not?
Lars Jorgensen, CEO
Yes. So Karsten, I think, both for you.
Karsten Knudsen, CFO
In terms of wholesale stocking, this is in our first half commentary and it's linked to the wholesale stocking we saw in the first quarter and communicated already in our first quarter release. So no material wholesale movements in the second quarter. As to the lower dose strengths of Wegovy in the U.S., again, it's important for us to reiterate that all dose strengths are available in the U.S. market of Wegovy, but we are limiting the lower dose strengths. So we only start the amount of patients that can titrate up, as evidenced in the ongoing IQVIA script monitoring. After September, we expect that to continue to be the case. We'll dynamically be managing how many new patients we take on to the lower doses.
Operator, Operator
Your next question comes from the line of Peter Welford from Jefferies.
Peter Welford, Analyst
I have two questions. First, regarding SELECT, Martin, I'm curious if you can share whether the focus at the AHA presentation will be on the primary endpoint or if you will also cover any of the interesting secondary endpoints. I’m looking at the slide that highlights aspects like slowing Type 2 diabetes and other outcomes. Can you provide any insight into those endpoints from SELECT at AHA? Or is your approach more about gradually releasing SELECT data over time? Secondly, I’d like to revisit the question on Rybelsus, specifically about the rebates. Can you comment on the gross to net adjustment we see from prescriptions for Ozempic and Rybelsus in Q2? It appears that Q2 for Ozempic is solid, but could you address any considerations we should keep in mind regarding Rybelsus for potential changes during the second quarter?
Martin Lange, Executive Vice President, Head of Development
Our primary focus for the presentation at American Heart will be on the primary endpoint and the confirmatory secondary endpoint. We also have many interesting secondary endpoints that will be relevant to a wide audience. Our goal is to share as much information as possible during the congress and in related publications.
Daniel Bohsen, Head of Investor Relations
Thank you, Martin. Karsten, on the rebates from the U.S.?
Karsten Knudsen, CFO
Yes. Rebates in the U.S. and Rybelsus specifically. It's correct, as you point out, there's some fluctuation in the gross net on Rybelsus. The way you should think about it is that we had a slight positive rebate adjustment in the first quarter this year on Rybelsus and a slight negative rebate adjustment on Rybelsus in the U.S. in the second quarter. So that's why when you do quarter-over-quarter, the sequencing doesn't look completely obvious. It's minor amounts, and we're talking about a few hundred million DKK. It's not something we normally call out, but that's what's happening. The basic trends and the demand dynamics are still very strong as evidenced by the continued adoption of Rybelsus sales on a global scale.
Operator, Operator
Your next question comes from the line of Simon Baker from Redburn.
Simon Baker, Analyst
Two, if I may, please. Firstly, going back to Wegovy capacity, but not on fill and finish, on API. I just wondered if you could update us on where you are versus your current capacity on API? And then secondly, a question on Inversago and Ziltivekimab. Looking at the data that was presented at ADA. There was even a pretty broad range of responses in terms of weight loss. The weight loss was greater than we saw in the Phase I study by a week. I just wonder if you could give us, firstly, an idea of any potential reasons for that spread of results? Secondly, is there any data, preclinical or clinical beyond 28 days, to see whether this is plateauing at a fairly modest level or whether it continues to go down as we see with your existing products?
Karsten Knudsen, CFO
In terms of semaglutide API, Simon, thank you for that. I think the starting point here is really look at our track record. Ozempic is the best-selling diabetes care product globally, growing more than 60% last year, and we expect growth to continue at a similar pace. This speaks to our scalability on the API front. We're scaling our API setup significantly. A key part of our DKK 25 billion CapEx program this year is invested in peptide API, which will be multiuse and hence cater for semaglutide manufacturing in the years to come.
Martin Lange, Executive Vice President, Head of Development
We've seen a broader set of data than what has been publicly available. We can't disclose that now, but obviously, it gives us a lot of comfort in not only the level but also the consistency of weight loss. With the weight loss, there is some variation. We see that with most drugs. But it has not been anything that has concerned us. We've seen more than what has been publicly disclosed. With longer exposure time, it has given us sufficient comfort to proceed with the acquisition.
Operator, Operator
And your next question comes from the line of Florent Cespedes from Societe Generale.
Florent Cespedes, Analyst
Two, please. First, on China. Could you elaborate on the dynamic in this territory and if the back-to-growth is sustainable? And my second question, a follow-up on the product acquired today, the CB1. Could you confirm that you will initiate soon a Phase II program in monotherapy and in combo? If it's highly likely that you will combine this product with Wegovy and CagriSema?
Karsten Knudsen, CFO
The volume-based procurement impact in China, which started in May of last year, had a sizable impact on our Chinese business. The growth rates for China in the second quarter of more than 30% are really impressive. This is a story about the value of innovation. We are being impacted by our older brands, but we're seeing, most notably, Ozempic growing significantly in China, along with Xultophy and Ryzodeg. The Chinese opportunity remains intact as long as we continue to provide innovation into that market. We have also filed for Wegovy approval in China now, so we see China as a significant long-term opportunity for the company.
Martin Lange, Executive Vice President, Head of Development
I can confirm indeed that we will initiate a Phase II trial investigating the INV-202 in patients with obesity in both mono and combination therapy. I cannot go into which combinations we will investigate.
Operator, Operator
And your next question comes from the line of Kerry Holford, Berenberg.
Kerry Holford, Analyst
Yes, two questions, please. Firstly, on oral GLP-1. Aside from the Q2 performance, I wonder if you can just talk to why perhaps Rybelsus uptake in the diabetes market at least relative to Ozempic, has not been as substantial as you might have expected by now. And with that in mind, as you're approaching the launch of oral Wegovy, what do you within Novo expect from the ramp of a new oral therapy into the obesity market? Secondly, on GLP-1 formulation, your key competitor in the diabetes space has announced plans to launch its new product in certain markets in a vial format. I wonder if that's something you would consider for Wegovy in order to meet those supply demand.
Camilla Sylvest, Executive Vice President, Head of Commercial Strategy and Corporate Affairs
In terms of dynamics for Rybelsus, we continue to gain share in the oral antidiabetic segment. Of course, some patients prefer oral therapy while some prefer injectable therapy. It's clear that overall, we continue to grow the use of GLP-1. If you are also asking into the oral opportunity in obesity, we expect that there will be people who will favor oral therapy in obesity as well. There is a significant unmet demand in obesity for oral compounds, with an efficacy that is quite similar to Wegovy 2.4.
Lars Jorgensen, CEO
I think we have a situation where we have 2 different device presentations for our GLP-1 portfolio. We have the single-shot device for the U.S., and we leverage our FlexTouch platform outside of the U.S. We have significant flexibility and better scalability in this approach compared to relying solely on a single-dose approach. We do not have any current plans of moving to vial dosing for GLP-1 formulations.
Operator, Operator
We will now take the next question. And your next question comes from the line of Mike Nedelcovych from TD Cowen.
Michael Nedelcovych, Analyst
I have two for Martin. The first is based on the impressive results we've seen with SELECT. Do you have any plans to conduct a cardiovascular outcomes trial in a primary prevention setting, perhaps with CagriSema? And if not, why not? And the second question is, Martin, you recently suggested you would consider running a trial to test alternative maintenance phase regimens after achieving target weight loss with either Wegovy or possibly CagriSema. Can you update us on your thinking around a potential trial in that vein? Might we see an initiation sometime in the near future?
Martin Lange, Executive Vice President, Head of Development
Two great questions. So first on primary prevention. We are, of course, considering this given the SELECT results. You may know that we're also investigating primary prevention for semaglutide in diabetes already. If there was a reason not to, it would be that the event rate in obesity is somewhat lower than we see in diabetes, and that means it would have to be a very large trial. We are taking all of this into account, and we'll keep you updated, but we've made no decisions at this point. In terms of the maintenance, this is part of our commitment to secure that an accrued weight loss can be maintained. We have been awaiting the SELECT trial, as we are curious about the extent of weight loss maintenance over a full 5-year period for early patients. While I can’t disclose the data, I reiterate our commitment to investigating how to best maintain weight loss following semaglutide and CagriSema down the road.
Operator, Operator
We will now go to our next question. One moment, please. And the next question comes from the line of Harry Sephton from Credit Suisse.
Harry Sephton, Analyst
My first one is on the Ozempic number in the U.S. in the second quarter. Prescription growth was about 96%, but you reported 44% sales growth. I was hoping you could confirm that there weren't any one-off gross-to-net exceptions in the second quarter and that's just a reflection of your expected level of rebating with the growth in the product? My second question on tax. At this stage, can you indicate the expected impact to your effective tax rate from implementation of the global minimum tax rate?
Karsten Knudsen, CFO
No, there are no special major gross-to-net adjustments in the quarter. Note that between what you see in IQVIA numbers and our net sales, you have inventory movements that could impact the numbers. We're still in the 10% to 15% net price decline range. The effective tax rate will be minor. We're currently running around a 20% effective tax rate, which is approximately the level we will be looking at moving forward, barring any major business development or mergers that would change our structure.
Lars Jorgensen, CEO
We have time for one final set of questions, please.
Operator, Operator
Your final question comes from the line of Michael Novod from Nordea.
Michael Novod, Analyst
Two questions. One, regarding the gradual rollout of Wegovy in International Operations. You commented to 2023; how confident are you regarding a gradual, but also more accelerated rollout in '24 and '25? What should we be able to expect in terms of larger markets? Secondly, relating to Germany, can you detail a bit around the disease modification program in Germany that has triggered you to launch, albeit in a controlled fashion in Germany for Wegovy?
Lars Jorgensen, CEO
Thank you, Michael. Camilla, would you provide some color on that?
Camilla Sylvest, Executive Vice President, Head of Commercial Strategy and Corporate Affairs
We've launched in the U.S., Denmark, and Norway, and we see consistent trends on Wegovy. We will continue to roll out Wegovy in a responsible manner, observing the uptake and demand. We have decided to launch in Germany because of the opportunity to include Wegovy in the disease management program, ensuring that those most in need can access it. This is a slightly different approach due to the high demand, so we are continuing to roll out in Germany while being mindful of patient continuity, which is our priority.
Daniel Bohsen, Head of Investor Relations
Thank you, Camilla. This concludes our Q&A session. Thank you for participating in the call, and feel free to reach out to Investor Relations with any follow-up questions. Before closing the call, I would like to give the word to you, Lars, for any final remarks.
Lars Jorgensen, CEO
Thank you, Daniel. A warm thanks to everyone for your interest today. I hope it provides you with assurance that we are very pleased with the momentum we have in our business as represented in the growth for the first 6 months and our guidance for the year. We're pursuing an innovation-based growth strategy, and the data we received from SELECT underpins a very attractive mid- to long-term growth profile for semaglutide. We are confident in our scale and supply aspirations, and we see capacities coming in line as we speak. We have made important investment decisions to support this growth aspiration for the future. With that, I'll close this call, and thank you again for your interest.
Operator, Operator
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.