Is Novo Nordisk Stock a Buy Now? Assessing Long-Term Growth in Diabetes and Obesity Therapeutics
The question of whether Novo Nordisk (NVO) stock is a buy now hinges on its ability to sustain dominance in the rapidly evolving diabetes and obesity therapeutics markets. While the Danish pharmaceutical giant has enjoyed meteoric growth from its GLP-1 receptor agonists Wegovy and Ozempic, intensifying competition, supply constraints, and the rise of compounded alternatives are reshaping the landscape. This analysis evaluates NovoNVO-- Nordisk's long-term growth potential, balancing its strategic strengths against emerging headwinds.
Dominance in a High-Growth Market, But with Erosion Risks
Novo Nordisk's 2024 revenue of $40.5 billion was driven by Wegovy and Ozempic, which accounted for 60% of total sales, with Wegovy's global revenue hitting $8 billion and Ozempic contributing $17 billion [1]. However, the company's revised 2025 guidance—8–14% sales growth at constant currencies, down from 13–21%—reflects a more challenging environment. Eli Lilly's Zepbound and Mounjaro have eroded Novo's U.S. market share, with LillyLLY-- capturing 57% of the GLP-1 market in Q2 2025 [2]. Compounded GLP-1 drugs, often sold at lower prices, further threaten Novo's pricing power, particularly in the U.S. [3].
Despite these pressures, the global obesity drug market remains a $36.3 billion opportunity by 2032, driven by rising obesity prevalence and regulatory approvals for GLP-1s in metabolic-associated steatohepatitis (MASH) [4]. Novo's recent formulary win with CVS HealthCVS--, which now covers Wegovy as the sole GLP-1 drug for obesity on its national template, could stabilize insured channel prescriptions [1].
Strategic Moves to Counteract Competitive Pressures
Novo Nordisk is addressing headwinds through a mix of operational and innovation-driven strategies. The acquisition of three Catalent fill-finish manufacturing sites for $11 billion aims to alleviate supply constraints, a critical factor given Wegovy's 78% sales growth in H1 2025 at constant currency [5]. Additionally, the company launched the NovoCare Pharmacy in March 2025, streamlining direct-to-patient access and facilitating 11,000 weekly prescriptions [1].
On the innovation front, Novo is advancing next-generation therapies, including subcutaneous and oral amycretin (GLP-1/GIP dual agonists) in Phase 3 trials for weight management. Its experimental drug CagriSema demonstrated a 15.7% weight reduction in clinical trials, positioning it as a potential blockbuster [5]. A regulatory decision on Wegovy's MASH indication in H2 2025 could unlock a $10–$15 billion market, according to analysts [1].
Long-Term Risks and Mitigation
The primary risks to Novo's long-term growth include:
1. Competition: Lilly's Zepbound and Novo's own Ozempic/Wegovy overlap in diabetes and obesity markets.
2. Compounded Drugs: Unregulated alternatives, though cheaper, pose reputational and revenue risks.
3. Emerging Markets: Patent expirations in India and other regions could accelerate generic competition [3].
To mitigate these, Novo is litigating against illegal compounders and leveraging direct-to-patient strategies. Its restructuring plan, including a 9,000-employee reduction, redirects resources to R&D and commercial execution [5]. Analysts note that Novo's robust operating margin (29% growth in H1 2025 at constant exchange rates) provides flexibility to fund innovation [3].
Verdict: A Buy for the Long-Term, but with Caution
Novo Nordisk's leadership in GLP-1 therapeutics and its pipeline of next-generation drugs justify a long-term bullish outlook. However, the company's revised growth forecasts and competitive pressures necessitate a cautious approach. Investors should monitor:
- Regulatory approvals for Wegovy's MASH indication and CagriSema.
- Market share retention in the U.S., where compounded drugs and Lilly's Zepbound pose the greatest threat.
- Manufacturing scalability post-Catalent acquisition.
Historical backtesting of NVO's earnings release performance from 2022 to 2025 reveals that a simple buy-and-hold strategy saw average excess returns peak at +7.15% around day 24 post-announcement, with the strongest edge materializing three weeks after the event. While short-term (1–5 day) effects were modest (+0.4% to +2.3%) and not statistically significant, the data suggests that investors who held through post-earnings volatility could have captured meaningful gains over a 24-day horizon. This aligns with Novo's long-term growth narrative, reinforcing the case for patience in navigating near-term competitive pressures.
For those with a 5–10 year horizon, Novo NordiskNVO-- remains a compelling buy, given its entrenched position in a high-growth sector and its commitment to innovation. However, near-term volatility is likely as the company navigates a crowded GLP-1 landscape.
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