Novo Nordisk is trading as if obesity drug craze never happened

Novo Nordisk A/S shares have fallen so much this year that it’s almost as if the frenzy around weight-loss drugs that propelled the Danish pharmaceutical company’s meteoric rise never happened.

The shares have plunged more than 50% so far in 2025, on track for their worst-ever year, amid disappointing clinical trial results, multiple profit warnings and intense competition in the obesity-drug market. The slump has virtually wiped out several years of stellar gains that came after Novo’s Wegovy drug was approved as a weight-loss treatment in 2021.

 

 

 

 

 

 

 

 

 

It’s a stunning reversal of fortunes for a company that started this year as Europe’s most valuable listed firm. And with the main compound patent for semaglutide — the key ingredient in Wegovy and Ozempic — set to expire in 2032 in the US, some investors are worried about where future sales growth will come from.

“When I look at it right now, organically, their pipeline doesn’t convince me that this situation is manageable,” said Paul Major, a portfolio manager at Bellevue Asset Management. Major, who sold shares in Novo earlier this year, said the stock will probably continue to de-rate until investors see a compelling catalyst to reassure them on Novo’s future growth.

Novo bulls are hoping that pending approvals of a higher-dose Wegovy shot and an oral version of the drug will turn things around and boost the company’s position against rival Eli Lilly & Co. Novo has sought approval of the stronger injectable version of Wegovy in the US under a priority voucher, which will speed review. For the pill, it’s targeting a launch early next year.

Explainer: How Novo Nordisk Is Aiming for a Weight-Loss Recovery

“Assuming approvals and successful launches, both a higher-dose injection and an oral version of Wegovy could work as catalysts for Novo’s share price recovery,” said Gregoire Biollaz, senior investment manager at Pictet Asset Management, which holds Novo shares in its Longevity fund. “The weight-loss drug that Novo currently has on the market is inducing less weight loss than Lilly — so Lilly has stronger commercial messaging.”

Obesity Pill

Pricing and availability of the pill will be key. If Novo manages to get its drug to market before Lilly’s version, investors will be scrutinizing how it capitalizes on its first-mover advantage — something it failed to do with the Wegovy injectable in 2021. The launch will be led by a new chief executive officer and overhauled board under company veteran Lars Rebien Sorensen, who criticized the previous management for being too slow to respond to challenges in the US market.

Mike Doustdar, who took the helm as CEO in August, said last month that Novo has “more than enough” pills for its target launch. The company has also confirmed it’s in “preliminary” talks with Hims & Hers Health Inc. to sell the obesity pill on its telehealth site.

“I think they’ve learned their lesson and will be much better and execute better this time around,” said Sebastien Malafosse, a portfolio manager at Edmond de Rothschild Asset Management. As for the company and its share-price slump this year, Malafosse thinks Novo is in a period of transition. “Novo is clearly not dead,” said Malafosse, who holds Novo shares.

A head-to-head trial comparing Novo’s CagriSema drug against Lilly’s Zepbound will be another focus in 2026, while Novo’s initial guidance for the year will also be key for sentiment. Analyst estimates tracked by Bloomberg suggest that sales may drop in 2026, a stark contrast to the 25%-30% growth seen during Novo’s boom years. Clarity on this “could be the last overhang on the stock,” Pictet’s Biollaz said.

 

 

 

 

 

 

 

 

 

The analyst community is still largely positive on Novo, with 17 of the 33 firms tracked by Bloomberg rating the shares a buy as of Wednesday’s market close. For some, like Berenberg’s Kerry Holford, the share-price slump has gone too far and a higher valuation is warranted.

“At current levels, the shares price in limited pipeline value,” Holford wrote in a note last week. “We are prepared to pay a higher premium for the pipeline given Novo’s strong R&D returns track record.”

Novo shares trade at around 14 times expected earnings — about half of their average valuation over the past five years. It’s also more than 10% cheaper than the MSCI World Pharmaceuticals Index.

Novo isn’t the only European obesity stock that has struggled this year, with shares of Zealand Pharma A/S down almost 30%. Lilly shares, meanwhile, have soared more than 25%.

“The market has chosen its camp and thinks that only Lilly will benefit from the huge growth in the market, which I think is quite an extreme position,” Edmond de Rothschild’s Malafosse said. “Lilly is getting most of the new patients at the moment, but I don’t think it will last.”

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