Novo Nordisk’s Resilience Amid Biosimilar Headwinds: A Strategic Pivot to GLP-1 Dominance

In a market increasingly crowded with copycat drugs, Novo Nordisk (NVO) has weathered the storm of biosimilar competition and rising rival threats, posting mixed but resilient Q1 2025 results. While the Danish pharmaceutical giant lowered its sales guidance, its core growth engine—GLP-1 therapies—remains intact, fueled by strategic pivots to outmaneuver rivals and capitalize on the booming obesity and diabetes markets.

Q1 Results: A Tale of Two Markets

Novo Nordisk reported Q1 revenue of $11.9 billion, matching expectations, but its earnings per share (EPS) of $0.99 surpassed forecasts. The standout performer was Ozempic, which generated $4.9 billion—3% above estimates—despite supply constraints. However, Wegovy, its weight-loss blockbuster, fell short by $160 million, blamed on limited supply and the encroachment of Eli Lilly’s Zepbound.

The real story lies in the shifting dynamics: insulin sales, once the backbone of Novo’s profits, now account for just 20% of total sales, down from historical highs. Biosimilars like Sanofi’s Toujeo and Eli Lilly’s Basaglar have slashed insulin prices, pushing Novo to pivot aggressively toward GLP-1 drugs, which now represent 70% of sales.

Biosimilars: A Double-Edged Sword

While biosimilars have eroded insulin margins, they’ve also accelerated Novo’s strategic rebirth. The company’s reduced full-year sales growth guidance (now 13–21% vs. prior 16–24%) reflects not just supply chain hurdles but the looming specter of Medicare price negotiations under the Inflation Reduction Act. Analysts estimate that Ozempic and Rybelsus could face discounted pricing starting in 2027, which could trim profit margins.

Yet, Novo is countering these risks with a multi-pronged strategy. First, it’s doubling down on its GLP-1 dominance:

1. Oral semaglutide: Expected to launch in the U.S. obesity market by 2026, this pill form of its blockbuster drug could bypass the need for injections, potentially outpacing Lilly’s oral Zepbound.
2. Amycretin: A next-gen compound targeting diabetes and obesity, set for potential approval by 2029, adds depth to its pipeline.
3. New indications: Trials exploring semaglutide’s role in NASH (liver disease) and Alzheimer’s, with data expected this year, could unlock entirely new markets.

The Battle for Market Share

Lilly’s Zepbound has already surpassed Wegovy in U.S. weight-loss sales, a clear warning sign. To regain ground, Novo is leveraging partnerships with telehealth platforms and pharmacy networks like CVS, which has designated Wegovy as its preferred GLP-1 weight-loss drug. Meanwhile, its NovoCare direct-to-patient service aims to counter the loss of unbranded compounded semaglutide, which is expected to decline after May 2025.

Risks on the Horizon

The path forward is not without obstacles. Medicare’s price negotiations, which could begin in 2027, loom large. Morningstar analysts caution that the “High Uncertainty Rating” tied to Novo’s economic moat stems from these regulatory risks. Additionally, Lilly’s pipeline—featuring orforglipron and retatrutide—threatens to further erode Novo’s lead over the next decade.

Conclusion: A GLP-1 Titan with Clear Pathways

Despite the headwinds, Novo Nordisk remains a powerhouse in the GLP-1 space. Morningstar’s $75 billion market capture target by 2031—out of a projected $200 billion global GLP-1 market—underscores the company’s enduring dominance. Its patent-protected semaglutide portfolio, extending to 2032, provides a fortress-like shield against biosimilar copycats in this segment.

The reduced sales guidance reflects realism, not weakness: Novo is recalibrating expectations to account for supply chain bottlenecks and regulatory uncertainties. With a strong balance sheet (cash reserves of $26 billion as of 2024) and a pipeline brimming with next-gen therapies, the company is positioned to defend its crown.

Investors, however, must weigh two truths: Novo’s GLP-1 franchise is unparalleled, but its insulin legacy is fading fast. For now, the stock’s undervaluation at a 30% discount to Morningstar’s $640 fair value estimate suggests a buying opportunity—if one is willing to bet on the GLP-1 revolution outpacing the biosimilar storm.

In the end, Novo Nordisk isn’t just surviving—it’s redefining the rules of a market it created. That’s a story worth betting on.