How NVO (Novo Nordisk A/S) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a pharmaceutical and healthcare leader like NVO Income Statement Overview makes money is essential for investors and anyone interested in the business of diabetes, obesity, and rare disease therapeutics. In this post, we break down NVO's quarterly income statement (Q2 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick NVO Overview

NVO Income Statement Overview operates as a global leader in diabetes and obesity care, with a growing presence in rare disease therapeutics. The company’s business model centers on developing, manufacturing, and marketing innovative pharmaceuticals, primarily injectable and oral treatments for chronic conditions.
Revenue comes predominantly from its Diabetes & Obesity Care segment, which includes blockbuster drugs for diabetes management and weight loss, as well as a smaller but fast-growing Rare Disease division focused on hemophilia and growth disorders.

Revenue Breakdown

• Total Revenue (Q2 2025): $11.7B (+12.9% YoY)
  • Diabetes & Obesity Care Revenue: $10.9B (93.6% of total, +12.3% YoY)
  • Rare Disease Revenue: $746M (6.4% of total, +23.7% YoY)
  • Growth is powered by expanding demand for GLP-1 therapies in diabetes and obesity, and strong uptake in rare disease treatments.

Gross Profit and Margins

• Gross Profit: $9.71B (83.3% gross margin)
  • Cost of Revenue: $1.95B (+25.0% YoY)
  • NVO maintains robust margins due to its scalable pharmaceutical manufacturing, premium pricing, and efficient supply chain management.
• Most costs come from raw materials, production, and distribution of pharmaceuticals.

Operating Income and Expenses

• Operating Income: $5.07B (+31.0% YoY, 43.5% margin)
• Operating Expenses: $4.64B (-5.3% YoY)
  • R&D: $1.77B (-27.7% YoY, 15.2% of revenue) — Focused on next-generation diabetes, obesity, and rare disease drugs; pipeline investments have moderated after major launches.
  • SG&A: $2.86B (+17.1% YoY, 24.5% of revenue) — Increased spending on global sales force, marketing for new launches, and administrative expansion.
  • NVO continues to prioritize innovation while controlling costs and expanding operations in high-growth markets.

Net Income

• Pre-Tax Income: $5.13B (+33.4% YoY, 44.0% margin)
• Income Tax: $1.11B (21.6% effective tax rate)
• Net Income: $4.02B (+32.2% YoY, 34.5% net margin)
• NVO converts a significant portion of sales into profit due to operational efficiency, strong pricing power, and global scale.

What Drives NVO's Money Machine?

• Diabetes & Obesity Care: 93.6% of revenue — Led by flagship GLP-1 drugs for diabetes and obesity, which continue to see double-digit growth.
• GLP-1 prescription volume: Surged in Q2 2025, with global demand up over 15% YoY, driving segment expansion.
• R&D investment: Focused on next-gen therapies and expanding indications, though spending moderated post-launch.
• Rare Disease pipeline: Fastest-growing segment (+23.7% YoY), though not yet a major profit contributor.

Visualizing NVO's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A and R&D) taking the largest chunk.
• Even after large investments in R&D and sales expansion, 34.5% of revenue drops to the bottom line.

Key Takeaways

• NVO's money comes overwhelmingly from diabetes and obesity therapeutics
• High gross and net margins illustrate the power of NVO's scalable, innovation-driven business model
• Heavy investment in R&D and global sales, balanced by efficiency in operating costs
• Ongoing growth is driven by GLP-1 drug demand, geographic expansion, and rare disease pipeline

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FAQ About NVO's Income Statement

1. What is the main source of NVO's revenue in 2025?

NVO generates over 93% of its revenue from Diabetes & Obesity Care, driven by its market-leading GLP-1 therapies. The remaining revenue comes from the Rare Disease segment, which is growing rapidly but remains a smaller contributor.

2. How profitable is NVO in Q2 2025?

NVO reported net income of $4.02B in Q2 2025, with a net margin of approximately 34.5%, reflecting strong profitability driven by high-margin products and operational efficiency.

3. What are the largest expense categories for NVO?

The biggest expenses on NVO's income statement are operating expenses, particularly Research & Development (R&D) at $1.77B and Sales, General & Administrative (SG&A) at $2.86B in Q2 2025. R&D investment focuses on next-generation therapeutics, while SG&A supports global sales and marketing expansion.

4. Why does Rare Disease operate at a loss?

Rare Disease, despite generating $746M in revenue, posted an operating loss in Q2 2025. This is because NVO aggressively invests in pipeline development and market expansion, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does NVO's effective tax rate compare to previous years?

NVO's effective tax rate in Q2 2025 was 21.6%, consistent with previous years. This moderate rate is primarily due to international structuring and tax benefits from share-based compensation.