Novo Nordisk Shares Climb Amid Wegovy Momentum but Face Cost Pressures as Trading Volume Ranks 99th

Novo Nordisk (NVO) rose 2.12% on August 21, with a trading volume of $0.71 billion, ranking 99th in market activity. The Danish pharmaceutical giant faces strategic shifts as it navigates cost pressures following a rapid workforce expansion to meet demand for its blockbuster drug Wegovy. Employee numbers surged from 43,260 in 2019 to 77,350 in 2024, with hiring costs nearly doubling to $9.9 billion. New CEO Maziar Mike Doustdar has initiated a global hiring freeze for noncritical roles, signaling potential layoffs, particularly in sales and administrative functions.

Recent regulatory progress, including FDA approval of Wegovy for treating metabolic dysfunction-associated steatohepatitis (MASH), expands the drug’s market potential. This indication targets 22 million U.S. patients, offering Novo a new revenue stream. Concurrently, a partnership with GoodRx aims to lower Ozempic costs for out-of-pocket buyers, countering competition from cheaper compounded alternatives. These moves aim to stabilize sales amid slowing demand for Wegovy and declining Rybelsus sales.

The company’s gross margin has contracted to its lowest level in two and a half years, driven by rising overhead costs and competitive pressures. Analysts highlight the challenge of balancing cost-cutting with maintaining market share, particularly in manufacturing, where 49% of recent hires were allocated. While Novo’s pipeline includes promising candidates like CagriSema, execution risks remain as it addresses operational inefficiencies and clinical hurdles.

The strategy of buying the top 500 stocks by daily trading volume and holding them for one day from 2022 to now delivered a 1-day return of 1.98%, with a total return of 7.61% over 365 days. The Sharpe ratio was 0.94, indicating good risk-adjusted returns, though the maximum drawdown of -29.16% underscores market vulnerabilities.