The Semaglutide Struggle: Can Novo Nordisk Navigate the Generic Storm?

In a stark reminder of the fragility of pharmaceutical dominance, Novo Nordisk (NVO) slashed its 2025 sales and profit forecasts this year, citing an unforeseen tidal wave of generic competition. The Danish drug giant’s flagship weight-loss and diabetes drugs—Wegovy and Ozempic—face unprecedented pressure from compounded versions of its GLP-1 receptor agonist (GLP-1RA) molecule, semaglutide. Once a symbol of biotech innovation, Novo now finds itself battling not just rivals like Eli Lilly but also a regulatory and market landscape turned upside down by compounded generics.

The Generic Tsunami: How Compounding Upended the Market

The crisis began in 2022, when supply shortages of Wegovy and Ozempic triggered a loophole in U.S. drug regulations. Compounding pharmacies, legally permitted to fill gaps in drug shortages, began producing unbranded, cheaper versions of semaglutide. Telehealth firms like Mochi Health and Hims & Hers seized the opportunity, marketing these compounded generics as affordable alternatives. By 2025, these knockoffs had eroded Novo’s market share, even after the FDA declared the branded drug shortage resolved in February.

The financial toll is clear: while Q1 2025 revenue surged 18% to $11.9 billion, the company’s full-year sales growth forecast was slashed to 13-21% from an earlier 16-24%. Operating profit growth was similarly downgraded, with CEO Lars Fruergaard Jørgensen calling the compounded drug surge a “rapid expansion” that stifled branded sales. Wegovy’s Q1 sales of $11.2 billion fell short of expectations, as compounded alternatives lured price-sensitive customers.

The Regulatory Showdown: FDA’s Deadline and Lingering Risks

The FDA’s May 22, 2025, deadline for halting compounded GLP-1RAs offers a lifeline. Once in effect, pharmacies will no longer legally produce these generics, potentially restoring Wegovy’s dominance. Novo’s shares rose 5.8% on May 7, reflecting investor optimism that the second half of 2025 will see a rebound. Yet risks linger: black-market sales of compounded drugs, regulatory delays, and the rise of Eli Lilly’s Zepbound—whose Q1 sales grew 45%—threaten to prolong the pain.

Novo’s Counterattacks: Legal Battles and Strategic Shifts

To reclaim its turf, Novo is pursuing dual strategies. Legally, it has vowed to sue entities distributing unapproved generics. Operationally, it’s collaborating with Hims & Hers to steer customers toward its own NovoCare Pharmacy, though this effort remains nascent. Meanwhile, the company’s pipeline holds promise: the delayed submission of next-gen drug CagriSema (expected early 2026) and the oral semaglutide formulation could redefine the market.

The Long Game: Why Investors Still Bet on Novo

Despite 2025’s turbulence, Novo’s moat remains intact. Its $26 billion market cap—the second-largest in Europe—reflects faith in its R&D prowess. GlobalData projects Wegovy’s sales could peak at $26 billion by 2031, a figure that hinges on Novo’s ability to defend its patents and outpace generics. Even in Q1, Wegovy’s 65% sales growth (versus 11% for diabetes drugs) underscores its enduring demand in a booming obesity market.

Conclusion: A Rocky Road, but the Finish Line Is in Sight

Novo Nordisk’s 2025 stumble is a cautionary tale of how quickly monopolies can fray. Yet the company’s fundamentals—scientific leadership, a robust pipeline, and a near-irreplaceable drug in Wegovy—suggest it will weather this storm. While compounded generics and competitors like Lilly pose near-term hurdles, the FDA’s May deadline and the delayed launch of CagriSema could catalyze a rebound. Investors betting on Novo are not just backing a stock; they’re wagering on the enduring power of innovation in a market where demand for effective obesity drugs shows no signs of abating.

As Jørgensen noted, “This is a temporary setback in a long-term story.” With $26 billion in peak sales on the horizon, the question isn’t whether Novo will recover—but how swiftly it can regain its footing. The answer, it seems, hinges on May 22 and the next chapter of GLP-1 dominance.