Novo Nordisk’s (NVO) downward guidance Tuesday sent its stock diving 20%, even as new leadership remains bullish on the company’s ability to maintain a market lead in the obesity drug space.

The maker of GLP-1 drugs Ozempic and Wegovy cut sales grown from 13%-21% down to 8%-14% for the year. That’s about half, on the higher end, of the 26% growth seen in 2024. Outgoing CEO Lars Jøregensen told reporters Tuesday that the compounding, or copycat, market in the US is to blame.

That is one of two key issues that appear to have taken the company by surprise. First was the shortage of both its GLP-1 drugs after they unexpectedly zoomed to popularity, creating a new weight-loss drug market.

Jørgensen said that the prevalence of compounded products, which are now restricted after the FDA declared an end to the shortage, is to blame.

“Despite the fact that it is now illegal … it’s still happening. And that’s one of the assumptions in the prior guidance, that that would be reduced significantly. And we see, actually, that is actually the same volume as we saw earlier in the year, around a million patients using a compounded product,” Jørgensen said.

The compounded products include those from Novo’s ex-partner, Hims & Hers (HIMS), which continues to sell the products based on a loophole in FDA rules that allows it to sell “personalized” products for patients who might have negative reactions or side effects to branded drugs — such as common GLP-1 side effects like nausea or dizziness. Novo recently ended its direct-to-consumer sales deal with Hims after the telehealth firm declined to stop selling compounded semaglutide vials.

The result has been a loss in the company’s first-to-market position, with competitor Eli Lilly (LLY) taking a harder stance, most recently lobbying Congress to help enforce the FDA rules and rid the market of compounding.

Jørgensen said Tuesday, “Ultimately, compounding will disappear. But it will take some time before it’s completely out of the market and we have a fair chance of regaining our fair share (of the market).”

Incoming CEO Mike Doustdar, who has served as Novo’s executive vice president of international operations, said the decline of the company’s stock, and therefore shareholder value, is disappointing.

“I don’t like it as an employee … as a CEO-elect, and I certainly don’t like it as a shareholder myself. But setbacks don’t define companies, our response does,” Doustdar said, adding that the guidance cut reinforces his mandate to put the company back onto a growth path.