Quote from Alex bobby on April 1, 2025, 4:25 AM

Novo Nordisk’s Sharpest Stock Decline in Decades: What’s Next for the Pharma Giant?

Novo Nordisk, Europe’s largest pharmaceutical firm, recently experienced its worst monthly stock performance since July 2002. The Danish company’s shares plummeted 27% in March, bringing the price down to 469.8 Danish Krone (€63) by the month’s end. This marked a 54% decline from its all-time high in June 2024, leading to the loss of its position as Europe’s most valuable company to LVMH and SAP.

Despite these significant setbacks, analysts remain optimistic, with some forecasting a potential upside of up to 60% over the next 12 months. But what factors are driving this sharp decline, and does Novo Nordisk have a recovery path ahead?

Eli Lilly’s Growing Threat to Novo Nordisk’s Market Share

One of the primary reasons behind the stock slump is the mounting competition from US rival Eli Lilly. The company’s weight-loss drugs, Zepbound and Mounjaro, are direct competitors to Novo Nordisk’s Wegovy and Ozempic.

Investor sentiment has been rattled by US weekly prescription data indicating that Novo Nordisk may be losing market share to Eli Lilly. On the last trading day of March, Novo’s stock dropped by 0.9%, while Eli Lilly’s shares gained 0.4%. Year-to-date, Novo Nordisk’s stock has declined 25%, whereas Eli Lilly’s stock has risen by 4.6%.

Adding to investor concerns, Novo Nordisk reported a decline in its net profit margin to 34.8% in 2024, down from 36% in 2023. The company also provided a conservative revenue growth forecast for 2025, estimating growth between 16% and 24% at constant currency. The midpoint of this forecast would be Novo’s slowest growth rate in three years. Analysts at Bank of America expect further downward revisions when the company releases its quarterly earnings report in May.

Investor fears have also been fuelled by former US President Donald Trump’s recent announcement regarding potential tariffs on pharmaceutical products, which could impact profit margins across the industry.

Disappointing Trial Results for Novo Nordisk’s Weight-Loss Drug Pipeline

Novo Nordisk’s struggles have been compounded by underwhelming trial results for its next-generation weight-loss drugs. In December 2024, the company announced phase 3 results for its obesity drug CagriSema, revealing a weight loss of 22.7% after 68 weeks—falling short of the projected 25%. This news triggered a 20% single-day drop in Novo Nordisk’s share price, marking the steepest decline in the company’s history.

The disappointment continued in March 2025, when updated trial data showed that CagriSema only achieved a 15.7% weight reduction over 68 weeks. This led to another 8% decline in the company’s stock price.

Meanwhile, Eli Lilly is gearing up to release trial results for its latest weight-loss drug, retatrutide, later this year. Preliminary data published in September 2024 showed that patients taking retatrutide experienced a 24% weight reduction over 68 weeks—surpassing CagriSema’s performance. Both CagriSema and retatrutide are expected to seek regulatory approval in early 2026.

Novo Nordisk’s Strategic Price Cuts for Wegovy

Despite the recent challenges, Novo Nordisk has taken strategic steps to maintain its foothold in the weight-loss drug market. The company recently announced significant price reductions for its leading weight-loss drug, Wegovy, in an effort to strengthen its US market position.

Following the US Food and Drug Administration’s (FDA) announcement that shortages of both Wegovy and Eli Lilly’s Zepbound had been resolved, both companies launched online pharmacies offering lower-cost, reduced-dosage vials for weight-loss treatments. Novo Nordisk is now offering cash-paying customers a 50% discount on Wegovy—a move widely seen as an attempt to regain market share and counteract Eli Lilly’s growing dominance.

Analysts’ Outlook: Is a Stock Rebound on the Horizon?

Despite the recent turmoil, many analysts remain bullish on Novo Nordisk’s long-term prospects. According to consensus estimates from Markets Insider and Bloomberg, the stock has an average upside potential of 57% to 60% over the next 12 months.

Analysts cite Novo Nordisk’s strong market presence, ongoing innovation in the weight-loss and diabetes drug sectors, and strategic pricing adjustments as reasons for optimism. While short-term volatility is expected, the company’s robust product pipeline and continued demand for its treatments could drive a recovery.

Conclusion

Novo Nordisk’s recent stock decline highlights the challenges facing the pharmaceutical industry, from intensifying competition to regulatory uncertainties. However, the company’s strategic pricing decisions and long-term growth potential keep analysts optimistic about a rebound. While the coming months will be crucial for Novo Nordisk, its ability to navigate these hurdles and maintain its market leadership will determine whether it can turn the tide and regain investor confidence.