Novo Nordisk has plummeted back to Earth after a stunning rise driven by Ozempic and Wegovy. Can the storied Danish pharma recover?
The speed and magnitude of Novo Nordisk’s rise and fall stand out even in the long history of turbulent biopharma valuations. Novo’s valuation increased by hundreds of billions in a few years amid the GLP-1 boom—and then fell just as fast as competition intensified and doubts about its next-generation drugs grew.
Created in 1989 through the merger of two Danish companies, Novo spent decades as a large, growing but somewhat anonymous outfit. The company traded on the New York Stock Exchange but its share price had never broken the $30 barrier when Ozempic won FDA approval for type 2 diabetes in 2017.
Ozempic initially had relatively little impact on Novo’s fortunes. Things began to change as Novo started publishing more evidence of changes in body weight in people taking semaglutide, the drug’s active ingredient.Novo’s share price crossed $30 in March 2021, the month the company reported 68-week data from people who took weekly 2.4 mg doses of semaglutide.
With evidence of efficacy in obesity and GLP-1 sales growing 26% in 2020, Novo was on the up when it received FDA approval for Wegovy in June 2021 but the rise was still gradual. Novo’s share price ticked above $40 around the time of the weight loss approval. Three years later, the stock peaked above $140.
The surge covered a period in which Novo’s GLP-1 sales ballooned, growing from 23.4 billion Danish krone ($3.7 billion) in the first half of 2021 to 72 billion Danish Krone ($11.2 billion) in the first half of 2024. Annual Wegovy sales rose eightfold between 2022 and 2024. Physicians wrote as many prescriptions for Wegovy in the first five weeks of its launch as they did for its predecessor Saxenda in its first four years on the market.
Novo’s GLP-1 diabetes and obesity medicines were so successful that they shaped the Danish economy, driving GDP growth, increasing the value of the Danish krone and suppressing interest rates. Changes in Denmark from motorway construction to surging hot dog sales were linked to Novo as the drugmaker rose to become the most valuable company in Europe.
Over the same period, excitement about the potential for further growth increased as Novo raced to meet soaring demand in its existing indications and began exploring additional major markets including Alzheimer’s disease.
But Novo struggled to keep up with demand throughout the boom years, reporting initial supply challenges in 2021 that were exacerbated by problems at a third-party plant toward the end of that year. U.S. supply began to improve in the summer of 2024, with first the 1.7 mg dose of Wegovy coming off the shortage list in April and the 0.5 mg and 1 mg doses following in August.
Yet, in those months when supply was finally starting to meet demand, Novo was entering a tailspin that saw its share price fall from above $140 to below $50 in 13 months as the company grappled with rivals on two main fronts.
After the Hype, the Hangover
Eli Lilly was one of the drivers of Novo’s descent. The approvals of Lilly’s Mounjaro in 2022 and Zepbound in 2023 established competitors to Novo’s Ozempic and Wegovy, respectively. Impressions that Lilly’s molecule may have an edge solidified in December 2024, when a head-to-head trial found people lost more weight on Zepbound than Wegovy. Novo’s efforts to improve on semaglutide’s efficacy have disappointed investors.
Lilly beat Novo to the direct-to-consumer channel, too, launching LillyDirect in January 2024 and cutting the cost of Zepbound vials for uninsured patients eight months later. As late as November 2024, Lars Fruergaard Jørgensen, then the CEO of Novo, was saying patients “should really be helped by insurance” as he differentiated his company’s offering from pharmacies offering compounded semaglutide online.
The pharmacies are the other group behind Novo’s downfall. Compounding pharmacies stepped in to meet demand for semaglutide across the more than 1,000 days when the molecule was on the FDA’s shortage list. Novo’s assessment of the threat compounders pose to its business evolved quickly around the end of 2024.
Asked in November 2024 about what market share compounders take, Jørgensen told analysts on an earnings call that the company had “limited visibility” into the topic. By February 2025, Dave Moore, EVP of U.S. operations at Novo, was telling analysts that pharmacies were “having an impact and it is growing faster than we had anticipated.”
Novo estimates 1 million patients are on compounded GLP-1s in the U.S. Lilly CFO Lucas Montarce said at an investor event in March that there is “very limited tirzepatide compounding,” something that Leerink Partners analyst David Risinger attributed to the fact that the molecule is harder to make than semaglutide.
The Turnaround Strategy
Reducing the number of patients on compounded semaglutide is one part of Novo’s turnaround strategy. BMO Capital Markets analyst Evan Seigerman said Novo executives’ tone on an earnings call in August “regarding compounders was notably more pointed, with clear understanding that more needs to be done.” Yet, the analyst believes targeting compounders is unlikely to provide a quick fix to Novo’s woes.
“While we appreciate Novo’s commitment to removing illegal compounded products from the market and their redoubled efforts in legal/regulatory channels, we continue to be of the view that this dynamic will take time to resolve and remain a headwind to Novo’s business in the meantime,” Seigerman said in a note to investors.
Novo is also changing its GLP-1 messaging, reverting to a focus on weight loss after expanding the scope of its campaigns to cover comorbidities.
Moore said on an investor call in August that Novo found “it’s a little premature” to expand messaging beyond weight loss. Patients are focused on weight loss, Moore said, and armed with real-world data, Novo believes it can show semaglutide is competitive.
The company has also changed the messenger; CEO Jørgensen was suddenly sent packing in May, ending his tenure on the most recent earnings call and passing the reins to Maziar Mike Doustdar. “Let me say this: Novo Nordisk’s strategy remains unchanged,” Novo Nordisk Board Chair Helge Lund said in announcing the mutual decision for Jørgensen to depart.
The removal of Jørgensen was a break from Novo’s decades-long history, with just five CEOs leading the organization over the 100 years that it has existed in one form or another. One analyst remarking on the leadership change during the conference callsaid “it just feels like there’s something pretty wrong here.”
Meanwhile, Novo is also racing to launch new products. A higher, 7.2 mg injectable semaglutide dose and an oral version of the molecule are nearing the market and the next-generation candidates CagriSema and amycretin are in or approaching Phase III. However, some analysts are yet to be convinced that Novo has a pipeline program that can fix its problems.
“We expect Novo to face continued headwinds as the competitive landscape intensifies without a clear answer from Novo in the pipeline,” Guggenheim Securities analyst Seamus Fernandez said in a note to investors.
