Novo Nordisk's Strategic Rebound: Can It Regain Weight-Loss Market Dominance?

The GLP-1 (glucagon-like peptide-1) obesity drug market, now a $58 billion juggernaut, has become a battleground for two pharmaceutical giants: Novo Nordisk and Eli Lilly. Novo, once the undisputed leader with 69% global market share in Q2 2024, now faces a stark reality: its U.S. GLP-1 market share has eroded to 45–50% by Q2 2025. This decline, driven by Eli Lilly's aggressive innovation and Novo's supply chain missteps, raises a critical question for investors: Can Novo Nordisk reclaim its dominance, or has the tide permanently shifted in favor of its rival?

The Erosion of Novo's Market Share

Novo's flagship drugs, Wegovy and Ozempic, once commanded 66% of the company's Q1 2025 revenue. However, Wegovy's sales dropped 13% sequentially in Q1 2025 due to supply shortages and the proliferation of compounded semaglutide alternatives. Meanwhile, Eli Lilly's Zepbound and Mounjaro—both based on tirzepatide—have outperformed Novo's offerings. Zepbound, for instance, achieved 21% weight loss efficacy compared to Wegovy's 15%, while Mounjaro's diabetes-focused results drove 111% year-over-year sales growth.

The compounded drug crisis has further compounded Novo's woes. Despite the FDA's 2025 crackdown on mass compounding, unapproved semaglutide alternatives continue to flood the market, capturing 30% of U.S. GLP-1 users. This has not only undercut Novo's pricing power but also eroded patient and physician trust in its branded products.

Management Transition and Strategic Reorganization

In July 2025, Novo Nordisk announced the appointment of Maziar Mike Doustdar as CEO, succeeding Lars Fruergaard Jørgensen. The leadership change came amid a 19.9% year-to-date stock decline and a revised 2025 sales growth forecast of 8–14% (down from 13–21%). Doustdar, a 33-year veteran of Novo, brings a focus on operational agility and innovation. His tenure coincides with a reorganization of R&D under Martin Holst Lange, aiming to accelerate the development of next-generation therapies like a once-weekly GIP/GLP-1 dual agonist and monlunabant.

However, the transition has raised investor concerns. The abrupt departure of Jørgensen and the stock's 21.7% plunge on July 29, 2025, signaled market skepticism about Novo's ability to execute its turnaround. Analysts emphasize that Doustdar's success will hinge on his ability to address supply chain bottlenecks, expedite CagriSema's approval, and compete with Eli Lilly's oral GLP-1 pipeline.

Valuation Metrics: A Tale of Two Giants

Novo Nordisk's valuation appears undervalued relative to Eli Lilly. As of Q2 2025, Novo trades at a P/E ratio of 19.79 and a PEG ratio of 0.69, compared to Eli Lilly's P/E of 56.35 and PEG of 4.43. The EV/EBITDA ratio further highlights this disparity: Novo's 11.4x is significantly lower than Eli Lilly's 34.69x. Analysts suggest Novo's stock offers a 53% upside potential, with a price target of $102.20, while Eli Lilly's target of $991.50 implies a 31.7% upside.

Institutional investors view Novo's diabetes care moat—62% U.S. market share in diabetes drugs—and its expansion into MASH (metabolic dysfunction-associated steatohepatitis) as long-term growth drivers. However, near-term risks, including Eli Lilly's upcoming oral GLP-1 (orforglipron) and Medicare coverage uncertainties, remain significant.

Strategic Entry Point or Overlooked Risk?

The current dip in Novo's stock price may present a strategic entry point for investors with a long-term horizon. While Eli Lilly's innovation pipeline and pricing strategy have outpaced Novo's, Novo's disciplined R&D spend (13.2% vs. Eli Lilly's 23%) and robust diabetes portfolio provide a stable foundation. The company's $4.1 billion U.S. manufacturing investment and pursuit of a MASH indication for Wegovy could unlock new revenue streams.

However, investors must weigh these opportunities against near-term challenges. CagriSema's underwhelming 22.7% weight loss results and the lingering threat of compounded drugs suggest that Novo's rebound will not be immediate.

Conclusion: A Calculated Bet on Resilience

Novo Nordisk's ability to regain GLP-1 market dominance hinges on three factors: resolving supply chain issues, accelerating its innovation pipeline, and regaining investor confidence. While Eli Lilly's current momentum is formidable, Novo's undervalued metrics and long-term growth prospects make it an intriguing bet for patient capital. For investors willing to navigate the near-term turbulence, Novo's strategic rebound could yield substantial rewards as the obesity drug market evolves.