Novo Nordisk’s Profit Woes: Copycats and Competitors Threaten Ozempic Dominance

Novo Nordisk, the Danish pharmaceutical giant behind the blockbuster weight-loss drug Ozempic and its obesity counterpart Wegovy, has issued a stark warning to investors: copycat versions of its drugs are eroding sales momentum, forcing a rare cut to its 2025 financial guidance. The move underscores the growing vulnerability of Novo’s $28 billion GLP-1 receptor agonist franchise to competition, both from FDA-authorized compounded generics in the U.S. and from biosimilars in China.

The immediate culprit is the surge of compounded versions of Ozempic and Wegovy in the U.S., permitted by the FDA during supply shortages. While the FDA has now mandated an end to these compounded alternatives by late May 2025, their availability for much of the first quarter already dented branded prescription growth. Despite robust sales—Wegovy revenue rose 83% to $2.65 billion and Ozempic gained 15% to $3.27 billion—both fell short of expectations. CEO Lars Fruergaard Jorgensen attributed the shortfall to “lower-than-planned branded GLP-1 penetration” caused by compounded alternatives.

The company trimmed its full-year 2025 sales growth forecast to 13-21% (down from 16-24%) and operating profit growth to 16-24% (down from 19-27%). The revision reflects not just the U.S. compounded disruption but also looming threats from biosimilars in China.

The U.S. Compounded Challenge
The FDA’s temporary allowance of compounded generics—low-cost alternatives mixed by pharmacies—was meant to address supply shortages. But their rapid adoption, particularly in cash-paying markets, has exposed a vulnerability in Novo’s pricing strategy. Compounded versions, priced roughly half that of branded Ozempic ($50–$100 per month vs. $500–$800), have attracted price-sensitive consumers. While the FDA’s May deadline should slow this trend, the damage to brand momentum may linger.

Analysts note that even after compounded versions are phased out, the precedent sets a risky precedent. “If patients and providers get used to cheaper alternatives, Novo’s ability to defend its pricing in the long term is compromised,” said Ritu Baral of Cowen Healthcare.

The China Biosimilar Tsunami
The bigger existential threat lies in China, where Novo’s patents for semaglutide (the active ingredient in Ozempic and Wegovy) expire in 2026. Already, at least 15 generic versions are in late-stage trials, with some potentially seeking approval as early as 2025. Leading contender Hangzhou Jiuyuan Gene Engineering has applied for regulatory clearance for its “Jiyoutai” biosimilar but cannot commercialize it before 2026 unless Novo’s patents are invalidated in court—a battle that could accelerate market entry.

Analysts estimate that once generics flood the market, prices could drop by 25%, severely crimping Novo’s margins in China, a critical growth region where its obesity drug sales grew 154% in 2024. Compounding the challenge: U.S. rival Eli Lilly is aggressively expanding in China, with its Mounjaro diabetes drug and obesity treatment expected to gain approvals in 2025.

Novo is fighting back. It has launched initiatives like NovoCare Pharmacy, a direct-to-patient delivery service, and partnerships with telehealth providers to simplify access. Yet executives acknowledge that post-2026, “a few more players” will enter China, though they question whether competitors can scale production to match demand.

Conclusion: A Franchise Under Siege
The guidance cut signals that Novo’s dominance is no longer a given. The compounded disruption in the U.S. is a near-term headwind, but the real test lies in China’s patent cliff. With generics poised to undercut prices and competitors like Lilly gaining traction, Novo’s ability to maintain its 90%+ market share in key markets is in doubt.

Investors should weigh two critical factors: the timing of patent expiries and the capacity of competitors to deliver biosimilars at scale. In China, if generics enter before 2026, the 25% price drop estimate could materialize sooner, shaving hundreds of millions from Novo’s bottom line. Meanwhile, U.S. data will show whether compounded alternatives’ impact was a one-quarter blip or a lasting behavioral shift toward cheaper alternatives.

For now, Novo’s stock—down 12% year-to-date—reflects these concerns. But unless the company can innovate faster than competitors (e.g., with next-generation drugs or delivery systems), its Ozempic empire may face a prolonged reckoning. The era of unchecked GLP-1 profits appears to be ending.

In short, Novo Nordisk’s guidance cut is more than a temporary setback—it’s an early warning of a new era of competition that could redefine the obesity drug market for years to come.