Novo Nordisk Stock Falls Amid Cost-Cutting Vow and Intensifying Competition

Novo Nordisk's stock is declining after its Q2 earnings report. The drugmaker plans to cut costs due to intensified competition and a plummeting stock price.

Title: Novo Nordisk's Stock Declines Amid Q2 Earnings Report and Competition Challenges

Novo Nordisk A/S (NVO) reported its second-quarter 2025 earnings on July 2, 2025, with the company's stock declining following the announcement. The Danish pharmaceutical giant reported earnings of 97 cents per American Depositary Receipt (ADR), beating the Zacks Consensus Estimate of 93 cents. However, total revenues of $11.68 billion fell short of the Zacks Consensus Estimate of $11.79 billion [1].

The company's Diabetes and Obesity Care segment saw a 17% increase in sales to DKK 71.94 billion, while the Rare disease segment reported a 28% increase to DKK 4.92 billion. Notable products such as Ozempic and Wegovy demonstrated robust growth, with Ozempic sales up 15% and Wegovy sales up 53%. However, the strong performance of these products was offset by a slowdown in sales of Victoza, which declined by 57% [1].

Novo Nordisk's stock price has been under pressure due to the company's announcement of a revised 2025 outlook. The company expects sales to increase by 8-14%, down from the previous 13-21% range, and operating profit to grow by 10-16%, down from the earlier 16-24% estimate. This revision reflects weaker-than-anticipated momentum for key drugs Wegovy and Ozempic, particularly in the U.S. market [1].

The company cited the continued use of unregulated, compounded GLP-1 alternatives, which have been sold under the guise of "personalized medicine." Despite the FDA ending its compounding grace period in May 2025, illegal semaglutide sales persist. Novo Nordisk has taken legal and regulatory action against these practices [1].

In addition to the competition from illegal compounded versions, Novo Nordisk is also facing competition from Eli Lilly (LLY), which markets tirzepatide medicines as Mounjaro for diabetes and Zepbound for obesity. Despite being on the market for less than three years, Lilly's Mounjaro and Zepbound have witnessed strong sales driven by rapid demand [1].

To address these challenges, Novo Nordisk is focusing on expanding the indications of its semaglutide drugs, as well as pursuing good pipeline progress with several new candidates for diabetes and obesity. The company is also building out its rare disease segment with late-stage progress on Mim8 for hemophilia A and recent FDA approval of a broader label for its Alhemo injection for hemophilia A or B with/without inhibitors [1].

Novo Nordisk remains optimistic about an increase in volume of Wegovy sales in the second half of 2025 through initiatives like NovoCare Pharmacy and CVS' exclusive formulary coverage, effective July 1, 2025, where the drug is now the only GLP-1 medicine covered for obesity [1].

References:
[1] https://www.nasdaq.com/articles/novo-nordisk-q2-earnings-beat-sales-miss-glp-1-drugs-face-us-hurdles