Novo Nordisk Faces Market Reality as Obesity Drug Boom Ends
The Danish pharmaceutical giant Novo Nordisk experienced a dramatic 20% share price plunge today as the company warned of "unprecedented" pricing pressures that signal the end of the obesity drug market's extraordinary growth period.
The Wegovy manufacturer shocked investors by forecasting potential profit and sales declines of up to 13% this year, marking the first such decline in years. This downturn reflects the harsh realities of increased competition and mounting pressure from US President Donald Trump's aggressive campaign to reduce pharmaceutical costs.
A Painful Transition Period
"Our 2026 guidance reflects a year of unprecedented pricing pressure," CEO Mike Doustdar acknowledged during a press call. He described the financial impact as "painful" but positioned it as an "investment for our future."
The company's stark warning represents a significant shift from the meteoric growth trajectory that began with Wegovy's launch in June 2021. Since then, Novo Nordisk had enjoyed years of double-digit percentage gains in both profits and sales, transforming it into Europe's most valuable listed company at $600 billion in 2024.
Market Saturation and Competition
Novo's challenges stem from multiple fronts. The company faces fierce competition as numerous pharmaceutical companies rush to enter the lucrative obesity drug market. Patent expiries on semaglutide, the active ingredient in both Wegovy and Ozempic, in markets outside the US add further pressure.
Perhaps most concerning is the rise of compounding pharmacies producing copycat versions of GLP-1 weight-loss medications, with an estimated 1.5 million Americans now using these alternatives.
Pricing Strategy Adjustments
In response to market pressures, Novo has implemented significant pricing changes. The company now offers lower doses of its daily Wegovy pill in the US for $149 per month for self-paying patients, increasing to $199 in April. Meanwhile, Wegovy injections are available at $349 monthly for cash-paying customers.
Competitor Eli Lilly plans to cap higher doses of its obesity pill at $399 monthly for cash buyers if approved, intensifying the pricing competition.
Investor Reaction and Market Impact
The guidance proved far worse than analyst expectations. While forecasters had predicted an average 2% decline this year, Novo's projection of 5-13% drops in both adjusted operating profit and sales caught the market off guard.
"Nobody had a double-digit profit decline on the agenda," noted Markus Manns, a portfolio manager at Union Investment. The share price collapse dragged Novo's valuation down to approximately $259 billion, erasing hundreds of billions in market value.
Signs of Hope in Oral Medications
Despite the challenging outlook, Novo reported encouraging uptake of its oral Wegovy formulation. Weekly prescriptions reached around 50,000 by January 23, significantly exceeding market tracking estimates of 20,000 per week. This strong performance suggests consumer willingness to pay out-of-pocket for convenient treatment options.
The pharmaceutical industry's obesity drug boom, which created unprecedented wealth and transformed treatment approaches to weight management, now faces a period of market maturation and pricing rationalization that will test companies' long-term strategies.