Novo Nordisk Shares Plunge 20% as nvo Slashes Wegovy Sales Forecast Amid Rising Competition

Novo Nordisk experienced a substantial downturn in its share value, plunging over 20% as the company announced a reduction in its sales growth forecast for its obesity drug, Wegovy. This forecast now stands at an expected growth of no more than 14% for the current year, a decrease from the previously anticipated maximum of 21% set earlier in May. The company attributed this adjustment to mounting competition from compounded versions of Wegovy, which are produced by pharmacies to circumvent drug shortages.

The Food and Drug Administration (FDA) had included Wegovy and the diabetes drug Ozempic, which is occasionally used for weight management, on its drug shortage list. This led compounding pharmacies to seize the opportunity to produce similar drugs, contributing to the competitive pressures faced by Novo Nordisk. Even though the FDA declared the Wegovy shortage ended earlier this year, compounded versions continue to affect the market. These pharmacies claim to meet patient needs by altering doses or adding vitamins to the formulas.

Novo Nordisk is actively pursuing strategies, including litigation, to counter the compounding practices. The compounders argue that their operations are legal under the Food, Drug, & Cosmetic Act, which allows custom formulations not commercially available but required for specific patients. This market dynamic has amplified challenges for Novo Nordisk, as its direct sales approach, aimed at consumers willing to pay cash for Wegovy, hasn't achieved the desired success. The firm reported that despite innovative distribution channels like the NovoCare Pharmacy established in March 2025, prescription numbers remain below expectations.

In response to these issues, the company has announced leadership changes. Maziar Mike Doustdar, a longstanding executive at Novo Nordisk with over three decades of experience, has been appointed as the new Chief Executive Officer, succeeding Lars Jorgensen. This transition comes at a critical time as the company attempts to bolster its competitive position and drive growth. Doustdar acknowledged these challenges in a call with investors, emphasizing efficiency, growth, and shareholder value as key mandates moving forward.

The competitive landscape in the obesity treatment sector is further intensified by rival Eli Lilly, which has enhanced its market presence by offering its product Zepbound at discounted rates directly to consumers, effectively converting users from compounded alternatives to their branded option. As Novo Nordisk navigates a complex regulatory and competitive environment, these strategies become crucial in shaping its future trajectory.

The broader implications of compounded drug sales present ongoing hurdles for Novo Nordisk, as aggressively marketed compounded prescriptions continue to expand their market share. The situation underscores a need for innovative approaches and policy engagement to stabilize market conditions for FDA-approved obesity treatments like Wegovy.

Looking ahead, Novo Nordisk faces the dual challenge of executing strategic responses to external market pressures while also adjusting to internal leadership changes. As analysts remain cautious, the company's future performance will be closely monitored, particularly its efforts to reclaim market momentum in the face of persistent competitive threats.