Novo Nordisk Stock Slumps to Multiyear Lows Amid Slower Obesity Drug Uptake and Competition

Novo Nordisk's stock has fallen to multiyear lows due to slower obesity drug uptake, strong competition from Lilly, and continued sales of alternatives. A revival depends on successful drug launches, curbing compounded drug sales, and expanding into new treatment areas. Despite setbacks, Morningstar sees long-term strength in Novo's portfolio and new launches.

Novo Nordisk's stock has fallen to multiyear lows, dropping to its lowest point since February 2022. The decline, which has erased tens of billions in market value, is attributed to slower-than-expected uptake of the company's obesity treatments, strong competition from Eli Lilly, and continued sales of cheaper, unbranded alternatives [1].

The stock's recent plunge began on July 29 when Novo Nordisk announced it was cutting its 2025 sales and profit forecasts. The company warned that slower-than-expected uptake of its obesity treatments and rising competition from Lilly would weigh on growth. Additionally, the unbranded compounded versions of Novo's semaglutide, which became popular in the United States, continue to be sold despite a May 22 deadline [1].

Morningstar Director of Healthcare Equity Research Karen Andersen believes Novo's ability to maximize the launch of its oral semaglutide in the US in 2026 could spark a rally in the stock. However, she will be closely watching Novo's execution and whether it can catch up to Lilly in the new direct-to-consumer channel [1].

Despite the setbacks, Morningstar still sees long-term strength in Novo's portfolio and new launches. The company's economic moat, driven by its intangible assets in diabetes and related cardiometabolic diseases, is expected to shield profitability for the long run. Novo's fair value estimate is $71 per share, with the stock currently trading around $52.41, indicating it is trading well below the fair value estimate and the average sell-side analyst estimate [1].

Eli Lilly has overtaken Novo Nordisk in the GLP-1 obesity drug market share, driven by Zepbound's superior clinical efficacy and aggressive commercialization. Zepbound achieved an average 20.2% weight loss compared to Wegovy's 13.5%, securing two-thirds of U.S. GLP-1 prescriptions and 41% year-over-year prescription growth [2]. This shift in market share reflects divergent strategies, clinical outcomes, and investor sentiment.

The future of the GLP-1 obesity drug market in 2025 will be a battleground of innovation, pricing power, and production readiness. Novo Nordisk, once the undisputed leader, now faces a formidable challenger in Eli Lilly. The obesity drug market is projected to reach $150 billion by 2030, and the company that dominates GLP-1 therapies will likely define the next decade of metabolic medicine [2].

References:
[1] https://www.morningstar.com/stocks/is-novo-nordisk-stock-buy-after-its-share-price-collapse
[2] https://www.ainvest.com/news/novo-nordisk-erosing-lead-eli-lilly-aggressive-pricing-strategy-obesity-drug-market-2508/