Novo Nordisk Plunges 2.8% Amid Patent Fears and Competitive Firepower: What’s Next for the Obesity Giant?

Summary
• Novo Nordisk (NVO) slumps 2.79% to $48.97, its lowest since October, amid mixed Q3 results and patent expiry concerns.
• CagriSema trial data and Eli Lilly’s Zepbound dominance weigh on investor sentiment.
• Institutional holdings rise despite 41% YTD decline, signaling cautious optimism.

Novo Nordisk’s sharp intraday drop reflects a perfect storm of earnings volatility, pipeline uncertainty, and intensifying competition. With key technical levels and bearish options activity signaling further downside, the pharma giant faces a critical juncture as it battles to retain market share in the obesity drug race.

CagriSema Trial Disappointment and Patent Expiry Fears Fuel Sell-Off
Novo Nordisk’s 2.79% decline stems from a confluence of factors: mixed results from its CagriSema phase 3 trial, which showed subpar efficacy in obesity, and a broader reassessment of its long-term growth prospects. The company’s revised 2025 sales guidance (8–11% CER) and the looming 2032 patent expiry for semaglutide have eroded investor confidence. Meanwhile, Eli Lilly’s Zepbound has outpaced Wegovy in prescriptions, intensifying competitive pressure. Analysts’ mixed ratings—ranging from ‘Strong Buy’ to ‘Sell’—further cloud the outlook, creating a volatile trading environment.

Pharma Sector Mixed as JNJ Trails NVO’s Slide
The pharmaceutical sector remains fragmented, with Johnson & Johnson (JNJ) down 1.84% alongside NVO’s decline. While Novartis’ recent gene therapy approval and Pfizer’s strategic bets on weight-loss drugs highlight sector innovation, Novo Nordisk’s struggles underscore the risks of over-reliance on a single therapeutic area. Institutional investors’ recent purchases of NVO shares suggest cautious optimism, but the broader sector’s mixed performance reflects divergent growth trajectories and regulatory headwinds.

Bearish Options and ETFs to Capitalize on NVO’s Weakness
• MACD: -0.202 (bearish divergence from signal line -0.747)
• RSI: 71.2 (overbought territory, suggesting near-term exhaustion)
• Bollinger Bands: Price at $48.97 (near lower band $45.40, indicating oversold conditions)
• 200D MA: $61.69 (price 22% below, signaling long-term bearish bias)

Key technical levels to monitor include the 200D MA at $61.69 and the Bollinger lower band at $45.40. A break below $45.40 could trigger a retest of the 52W low at $43.08. For options, two contracts stand out:

• NVO20251226P48
- IV: 33.42% (moderate volatility)
- Leverage: 68.92% (high potential return)
- Delta: -0.357 (sensitive to price swings)
- Theta: -0.031 (time decay manageable)
- Gamma: 0.131 (high sensitivity to price movement)
- Turnover: 1,026 (liquid)
- Payoff at 5% downside ($46.45): $1.45 per contract. This put offers a high leverage ratio and strong gamma, ideal for a bearish bias.

• NVO20251226P49
- IV: 34.36% (moderate volatility)
- Leverage: 41.12% (balanced return)
- Delta: -0.495 (high sensitivity to price drops)
- Theta: -0.029 (time decay controlled)
- Gamma: 0.137 (responsive to price swings)
- Turnover: 6,987 (high liquidity)
- Payoff at 5% downside ($46.45): $2.55 per contract. This put’s high delta and gamma make it a top pick for aggressive short-term bearish bets.

Aggressive bears should prioritize NVO20251226P48 for its high leverage and liquidity, while NVO20251226P49 offers a balanced approach for those expecting a sharper decline.

Backtest Novo Nordisk Stock Performance
The backtest of Novo Nordisk's (NVO) performance after a -3% intraday plunge from 2022 to the present reveals a significant underperformance. The strategy's CAGR is -10.60%, with a total return of -27.98% and an excess return of -106.71%. This suggests that the strategy not only failed to keep up with the benchmark but also underperformed it by a wide margin.

NVO at Crossroads: Watch $45.40 Support and Sector Catalysts
Novo Nordisk’s near-term trajectory hinges on its ability to stabilize its pipeline narrative and defend market share against Eli Lilly. A break below $45.40 (Bollinger lower band) could accelerate the decline toward the 52W low. Meanwhile, sector dynamics—such as JNJ’s -1.84% decline and Pfizer’s strategic shifts—highlight the broader challenges in pharma. Investors should monitor the 200D MA at $61.69 as a critical resistance level and consider bearish options like NVO20251226P48 if the stock fails to rebound above $49.18 (30D support). With the sector in flux, patience and discipline will be key. Watch for $45.40 breakdown or regulatory reaction.