Investment Research Report: Novo Nordisk A/S

📅 Publication Date: 10/19/2025

Note: This report is for informational purposes only and does not constitute investment advice; please refer to the full disclaimer at the end.

1. Investment Thesis in One Sentence

Novo Nordisk is trading near intrinsic value, offering balanced risk-reward with potential for double-digit compounding if regulatory and operational headwinds are successfully managed.

2. Introduction

Founded in 1923, Novo Nordisk traces its roots to two rival Danish insulin producers, Nordisk Insulinlaboratorium and Novo Terapeutisk Laboratorium, which later merged to form the company known today.

• Over the past century, Novo Nordisk has grown from a small medical lab into Denmark’s largest company and a cornerstone of its economy.

• The firm is majority owned by the Novo Nordisk Foundation, which prioritizes long-term research and patient impact over short-term market pressures.

Today, the company dominates global diabetes and obesity care through its GLP-1 drugs, led by Ozempic and Wegovy.

These treatments have redefined metabolic health and turned Novo into one of the most valuable healthcare companies in the world.

But even the strongest players stumble.

Over the past year, Novo has faced intensifying competition from Eli Lilly, production bottlenecks, compounded GLP-1 competition, and other headwinds.

• These challenges have weighed heavily on sentiment, business growth, and ultimately valuation.

• Despite operating in one of the fastest-growing segments of global healthcare, investor confidence has waned, and the stock now trades near its lowest valuation over the last decade.

Has Novo lost its prescription for growth, or is it just facing short-term symptoms?

In this report, we’ll analyze the company’s drawdown and pressure test each major factor contributing to the decline.

We’ll then explore whether these challenges represent lasting structural issues or temporary headwinds, followed by an analysis of risks, valuation, and my final take.

Let’s analyze the business and see what we find!

3. Business Snapshot

Overview:

Novo Nordisk operates in the research, development, manufacturing, and marketing of pharmaceutical products across the world.

The company reports through two main segments:

• Diabetes and Obesity Care: This segment includes products for diabetes management and weight loss, such as insulins, GLP-1 therapies, and oral antidiabetic drugs.

• Rare Disease: This segment focuses on therapies for hemophilia, blood disorders, endocrine and growth disorders, and hormone replacement treatments.

Today, Novo Nordisk sits as the seventh most valuable pharmaceutical company in the world.

General Information:

• Ticker: $NVO

• Sector: Pharmaceuticals

• Year Founded: 1923

• CEO: Maziar Mike Doustdar

• Market Cap: $238B

• Current Price: $54

Overall Revenue Growth:

Novo Nordisk’s financial trajectory reflects one of the most consistent and sustained growth stories in global healthcare.

• The company has grown revenue at nearly a 13% CAGR since 2015.

As we can see, growth has accelerated sharply in recent years.

• Total revenue increased at a 6% CAGR from 2015 to 2020, whereas over the last five years it has surged at a 21% CAGR.

Revenue by Segments:

As mentioned previously, Novo Nordisk operates through two core segments:

• Diabetes and Obesity Care, which contributes roughly 94% of total revenue.

• Rare Disease, which makes up the remaining 6%.

Diabetes and Obesity Care has long driven the bulk of revenue, and that dominance has only expanded as its GLP-1 and obesity drugs gained momentum.

The segment has grown at a 15% CAGR, significantly outpacing the Rare Disease segment, which has remained relatively flat over the last decade.

The Diabetes and Obesity Care segment consists of three key categories: GLP-1, Insulin, and Obesity Care.

Ozempic falls under the GLP-1 category, which also includes Rybelsus and Victoza.

Ozempic is an injectable prescription medication designed to manage blood sugar in adults with type 2 diabetes, powered by its active ingredient semaglutide.

• It’s also FDA-approved to reduce the risk of major cardiovascular events, such as heart attack and stroke, and to lower the risk of worsening kidney disease in certain patients with type 2 diabetes.

• In some instances, healthcare providers prescribe Ozempic for weight loss, though this was not its original purpose.

Rybelsus, which also belongs to the GLP-1 category, is a daily oral medication for adults with type 2 diabetes that uses the same active ingredient as Ozempic.

• It is designed to improve blood sugar control and help patients manage type 2 diabetes. For simplicity, it can be thought of as the “pill form” of Ozempic.

• Similarly to Ozempic, it is not FDA-approved for weight loss.

Lastly, Victoza is another GLP-1 drug for type 2 diabetes, but it has become a much smaller part of total revenue.

• While Ozempic isn’t a direct replacement, it’s often viewed as a more advanced, potent, and convenient evolution of Victoza.

• Victoza uses liraglutide, while Ozempic leverages semaglutide, a more effective compound requiring fewer injections (weekly vs. daily).

The insulin segment includes long-acting, premix, fast-acting, and human insulin.

• This segment has remained largely flat over the past decade, with each category generating similar revenue levels year to year.

• This trend reflects Novo Nordisk’s strategic shift toward its faster-growing and higher-margin GLP-1 and obesity treatments.

GLP-1 drugs not only provide better blood sugar control but also reduce patient dependence on insulin, changing long-term treatment patterns.

One of Novo Nordisk’s fastest-growing categories is Obesity Care, which includes Wegovy and Saxenda.

Wegovy is a once-weekly injectable prescription for chronic weight management and for reducing major cardiovascular risks.

• It mimics a natural hormone that regulates appetite and caloric intake, using the same active ingredient as Ozempic: semaglutide.

• The key difference is that Wegovy is formulated in higher doses and designed specifically for long-term weight management.

Saxenda, another injectable for chronic weight management, uses liraglutide as its active ingredient and requires daily injections.

• Similar to the transition from Victoza to Ozempic, Wegovy’s higher efficacy and more convenient dosing have made it the clear successor.

Outside of diabetes and obesity care, Novo Nordisk’s other core segment, Rare Disease, contributes about 6% of total revenue.

Within Rare Disease, Novo generates sales from treatments for rare blood, endocrine, and growth disorders.

The company has continued to invest in this smaller but strategically important business line.

• For example, in late 2024, Novo announced a $1.2B factory in Denmark dedicated to rare disease manufacturing, reinforcing its long-term commitment to the segment.

Novo Nordisk generates about 57% of its revenue from the United States.

The remaining 43% (rounded) comes from:

• EUCAN (Europe and Canada): 20%

• Emerging Markets (Latin America, Middle East, Africa): 10%

• APAC (Japan, Korea, Oceania, Southeast Asia): 6%

• China: 6%

Diluted EPS:

Novo Nordisk’s diluted EPS has compounded at a 16% CAGR since 2015, including an exceptional 24% CAGR over the past five years.

Free Cash Flow:

Novo Nordisk’s free cash flow has also grown consistently over the last decade, compounding at an 8% CAGR.

• Over the last five years, growth has moderated slightly to 7%.

From 2023 to 2024, free cash flow declined 16%, largely due to Novo’s $11B acquisition of three manufacturing sites from Catalent, a move aimed at boosting production capacity and easing GLP-1 supply constraints.

While revenue and EPS have climbed steadily, free cash flow has grown at a slower pace as Novo ramps up spending to expand manufacturing capacity.

Capital expenditures have surged from roughly $1B annually to nearly $9B in the last twelve months to support that expansion.

4. Context

For a brief moment, Novo Nordisk stood at the top of the hill.

• In mid-2024, not only was it the world’s most valuable healthcare company, but it was also the most valuable company in all of Europe.

• Shares peaked at $147 in June 2024, giving Novo a market capitalization of $655B.

Today, its market cap sits near $260B after shares fell nearly 60%, a steep decline for a company once viewed as untouchable.

The following section breaks down the major drivers behind the decline.

1/ Increased Competition from Eli Lilly

By far the biggest reason Novo Nordisk has taken a hit, and its most significant threat, is Eli Lilly.

• Eli Lilly has seen rapid growth across its obesity and diabetes portfolio, capturing market share in the GLP-1 drug category and accelerating prescription growth.

Growth Comparison

In the most recent quarter, Novo Nordisk’s GLP-1 drugs posted solid growth.

• Ozempic sales rose 15% YoY to $4.9B, while Wegovy surged 67% to $3.0B.

Eli Lilly, however, continues to scale faster.

• Mounjaro, Lilly’s treatment for type 2 diabetes, was designed to improve blood sugar control using the active ingredient tirzepatide. Similar to Ozempic, it’s often prescribed off-label for weight loss.

• Mounjaro revenue climbed 68% YoY to $5.2B in the latest quarter.

Lilly’s obesity-focused drug Zepbound, which uses the same active ingredient as Mounjaro, has seen even stronger momentum, with sales jumping 172% to $3.4B in the same period.

As of the most recent quarter, Novo’s combined GLP-1 drugs generated roughly $7.9B in sales (Ozempic $4.9B, Wegovy $3B).

Eli Lilly’s comparable drugs generated $8.6B (Mounjaro $5.2B, Zepbound $3.4B).

While Novo Nordisk still leads in combined trailing twelve-month sales, Eli Lilly is growing substantially faster, and S&P Global Market Intelligence expects it to surpass Novo on an annualized basis if current trends hold.

Market Share

Eli Lilly’s momentum is also visible in market share data.

• In Q1 2025, Lilly reported a 53% share of the GLP-1 market, overtaking Novo for the first time. By Q2, that figure rose to 57%, widening its lead.

• Market share is based on prescription data rather than revenue, providing a cleaner view of patient adoption.

In the first half of the year, IQVIA data showed that U.S. patients filled more prescriptions for Zepbound than for Wegovy.

Efficacy and Tolerability

Part of Eli Lilly’s success comes from stronger efficacy and tolerability outcomes.

• Lilly’s active ingredient tirzepatide acts as a dual agonist, mimicking two gut hormones, GIP and GLP-1, whereas Novo’s semaglutide targets only GLP-1.

• This dual action leads to greater appetite suppression and improved metabolic control.

The first head-to-head study of the two drugs for obesity, SURMOUNT-5, was published in The New England Journal of Medicine in May 2025.

• Over 72 weeks, patients on Zepbound lost an average of 20.2% of body weight, compared to 13.7% for those on Wegovy.

• While both drugs reported similar gastrointestinal side effects, Zepbound showed a lower discontinuation rate (6.1% vs. 8.0% for Wegovy).

Capacity and Supply Execution

A key factor in Lilly’s rapid ascent has been its superior manufacturing scale and supply execution.

Novo’s supply bottlenecks gave Lilly room to capture prescription share in the U.S. GLP-1 market.

• Lilly began investing heavily in capacity as early as 2020, long before its GLP-1 approvals.

• While Novo Nordisk keeps ingredient production in-house, Eli Lilly took a different path and turned to external contract manufacturers to help make Zepbound.

• The company committed roughly $9B to its Indiana facility dedicated to tirzepatide production and has since committed to investing more than $50B in total manufacturing expansion.

While both companies experienced shortages amid surging demand, Lilly’s proactive approach meant its supply constraints were generally less severe and shorter-lived than Novo’s, positioning it more favorably during a critical phase of market establishment.

• By December 2024, tirzepatide was officially removed from the FDA’s shortage list, while Novo’s semaglutide remained until February 2025, a two-month lag that mattered in a supply-constrained market.

Lilly also launched its direct-to-consumer platform, LillyDirect, in January 2024, more than a year before Novo’s NovoCare Pharmacy rollout, giving it another distribution advantage.

Forward Pressure and Pipeline

Novo has also faced mounting pressure, not only from Eli Lilly’s advancing pipeline, but from within its own development results.

The most notable example was CagriSema, Novo’s next-generation injectable combining semaglutide and cagrilintide.

• In late 2024, Phase 3 data showed 23% average weight loss at 68 weeks for adults without type 2 diabetes, short of the company’s >25% target and roughly on par with Lilly’s Zepbound.

• In a separate trial involving adults with obesity and type 2 diabetes, weight loss reached 15.7% at 68 weeks, also below the high-teens percentage that had been forecast.

While both results remain clinically meaningful, they fell short of market expectations for a clear efficacy improvement, curbing enthusiasm for what was once considered Novo’s next major growth driver.

Looking ahead, competition in the GLP-1 market with Eli Lilly remains intense.

Both companies are racing to deliver oral formulations, a more convenient alternative widely preferred by patients.

• Novo Nordisk is awaiting FDA approval for oral semaglutide for weight management in Q4 2025.

• Eli Lilly, meanwhile, is advancing oral tirzepatide in Phase 3 trials, with regulatory submissions expected by late 2025.

2/ Compounded GLP-1s Eroding Market Share

Another factor weighing on Novo Nordisk has been the rise of compounded GLP-1 drugs, which reduced legitimate prescription volume and squeezed market share.

• During periods when Wegovy and Ozempic were listed on the FDA’s shortage list, U.S. compounding pharmacies were allowed to create semaglutide-based alternatives, often sold through telehealth platforms such as Hims.

• These compounded versions, often cheaper and more accessible, appealed to patients who couldn’t obtain branded doses or secure insurance coverage.

In April 2025, Novo Nordisk partnered with Hims to improve affordability and redirect patients toward approved Wegovy treatments.

• However, after the FDA’s May 2025 deadline to end semaglutide compounding, Hims continued offering “personalized” compounded doses, a regulatory gray area.

• By June, Novo terminated the partnership, citing “deceptive promotion and illegal mass compounding,” while Hims defended its practices.

By August 2025, Novo Nordisk had filed more than 130 federal lawsuits across over 40 states targeting companies selling compounded GLP-1s.

The company has estimated that roughly 1 million Americans were using compounded versions as of late July, significantly impacting branded prescription growth.

Additionally, analysts at HSBC estimate that about 80% of compounding pharmacies target Wegovy due to its strong brand recognition, making Novo disproportionally affected.

3/ Reduced Financial Guidance

Strong competitive pressures and the surge in compounded GLP-1s have taken a direct toll on Novo Nordisk’s outlook.

• In July 2025, the company lowered its full-year guidance, cutting expected midpoint sales growth to 11% and operating profit growth to 13%, down from 17% and 20% previously, roughly a 35% reduction in full-year expectations.

• The downgrade reflected slower U.S. demand for Wegovy and Ozempic, weaker international uptake, and continued drag from compounded GLP-1s and Eli Lilly’s rapid share gains.

In September 2025, Novo announced plans to eliminate 9,000 roles globally (about 11% of its workforce) to improve agility and redirect capital toward higher-growth areas.

• After accounting for restructuring charges and one-off costs, midpoint operating profit growth was revised downward again to 7%.

The back-to-back cuts marked a clear turning point in sentiment, as competitive and operational headwinds began visibly weighing on earnings outlook.

4/ Leadership Change

Sentiment around a rebound weakened further when Novo Nordisk announced Maziar Mike Doustdar as its new President and CEO, effective August 7, 2025.

Doustdar, a 30-year company veteran, previously led Novo Nordisk’s commercial operations outside the United States and oversaw its international expansion.

• Despite his experience, investors were disappointed with the appointment due to his limited U.S. market background, a region where growth has slowed notably.

• Many had hoped for an external candidate who could bring fresh direction and accelerate progress in Novo’s largest market.

The company publicly framed the transition as part of a long-term succession plan and a comprehensive process that included both internal and external candidates.

• However, external reporting indicated that the move was also shaped by mounting market challenges and pressure from the company’s controlling foundation.

While Doustdar’s selection ensures operational continuity, the timing and context reinforced investor concern that Novo may be prioritizing stability over bold strategic change at a time when adaptability is most needed.

5/ Regulatory and Policy Risks 

Another layer of pressure on Novo Nordisk that has weighed on sentiment stems from regulatory and policy risks that could materially impact pricing power and profitability.

Medicare Price Negotiations (Inflation Reduction Act)

One of the most significant policy headwinds for Novo Nordisk is the Inflation Reduction Act (IRA), which allows Medicare to negotiate prices for select high-cost prescription drugs.

• Under the latest expansion of the program, Ozempic, Rybelsus, and Wegovy were selected for future price negotiations, with new prices expected to take effect in 2027.

In October 2025, a U.S. appeals court rejected Novo Nordisk’s legal challenge to the program, marking a key setback that keeps the negotiation process on track.

• Negotiations are ongoing, and the Centers for Medicare & Medicaid Services (CMS) is required to publish finalized prices by November 30, 2025.

• If implemented, the outcome could compress U.S. margins and weigh on profitability across Novo Nordisk’s GLP-1 portfolio.

U.S. Tariffs and “Most Favored Nation” Pricing Policy

A second major policy risk involves the Trump administration’s proposal to impose tariffs of up to 250% on pharmaceuticals.

• The administration is also pursuing a “Most Favored Nation” (MFN) pricing policy that would link U.S. drug prices to those in other developed markets.

In July 2025, letters were sent to 17 pharmaceutical companies, including Novo Nordisk, requesting commitments to lower prices by September 29.

Recently, Pfizer and AstraZeneca reached agreements with the administration to sell select medications at most-favored-nation pricing through a new government platform.

While Novo Nordisk has not yet reached an agreement, pressure to comply is mounting.

5. Opportunity

Is there light at the end of the tunnel for Novo Nordisk?

Or does the company’s challenges run deeper, reflecting structural issues rather than temporary headwinds.

• To find out, let’s pressure test each of the major pain points and uncover where meaningful upside potential could emerge.

1/ Competition With Eli Lilly

There’s no denying that Eli Lilly is growing faster and gaining market share, driven by Zepbound’s dual-agonist mechanism and demonstrated by strong results from the SURMOUNT-5 trial.

Still, Novo Nordisk retains several competitive advantages worth noting.

Regulatory Edge and Medical Differentiation

Semaglutide holds multiple FDA-approved indications that Eli Lilly’s portfolio currently lacks, a critical differentiator as the GLP-1 market expands.

• Ozempic and Wegovy are the only GLP-1 therapies proven to reduce the risk of major cardiovascular events such as heart attack and stroke.

• Ozempic is also approved to lower the risk of kidney failure and cardiovascular death in Type 2 diabetes patients with chronic kidney disease.

• In August 2025, Wegovy became the first GLP-1 therapy approved to treat non-cirrhotic MASH (liver disease).

• Novo’s GLP-1 drugs are also approved for adolescents aged 12 and older, a demographic Lilly has yet to reach.

Lilly currently holds an advantage with Zepbound’s approval for obstructive sleep apnea (OSA), but Novo is running late-stage trials to close that gap.

Across cardiovascular, kidney, and liver conditions, Novo currently leads in regulatory approvals, giving it a clinical and commercial edge.

Lilly’s ongoing trials may narrow the gap, but Novo’s first-mover advantage and patient retention from proven outcomes is likely to make switching unlikely.

Brand familiarity further reinforces this advantage, as Novo Nordisk’s obesity drugs have become synonymous with weight-loss drugs, and analysts say many Americans still don’t know Zepbound is more effective.

Pipeline and Future Products

Novo’s upcoming oral semaglutide for weight management could meaningfully strengthen its position in the obesity market.

• The company submitted for FDA approval in May 2025, with potential U.S. launch by late 2025 or early 2026.

Meanwhile, Lilly’s orforglipron, the company’s oral competitor, completed Phase 3 trials and plans submission by the end of 2025, putting Novo several months ahead.

• In trials, Novo’s Wegovy pill showed 16.6% average weight loss after 64 weeks, versus 12.4% for orforglipron after 72 weeks.

While Lilly’s pill is more convenient, requiring no food or water restrictions, Novo’s stronger efficacy and earlier entry provide a clear edge.

A Novo spokeswoman also reaffirmed that the company is “prepared for a full launch, with no supply constraints.”

Additionally, Dave Moore, Novo’s U.S. operations chief, recently told Bloomberg that the company plans to launch its new obesity pill on telehealth sites like Ro and WeightWatchers as soon as its approved.

• Novo is also exploring a subscription-style model that would allow patients to sign up for up to 12 months of treatment at a discounted price.

• From my perspective, this would be a great idea as it would help create more predictable revenue and stronger patient retention.

Additionally, just last week, Rybelsus, the only oral GLP-1 therapy for Type 2 diabetes, was FDA approved to reduce the risk of major cardiovascular events.

• Rybelsus uses the same semaglutide compound as Novo’s Wegovy weight-loss pill, validating its safety and efficacy and very likely paving the way for oral semaglutide to be approved for obesity treatment.

With Novo positioned to launch oral weight loss drugs first, it could capture meaningful share in what remains an untapped opportunity.

Lilly executives estimates that about 8 million Americans currently use diabetes or obesity drugs, while roughly 170 million could benefit.

• And with results for the Wegovy pill showing weight-loss outcomes comparable to injectables, patients who avoid needles will now have a clear and proportionate alternative.

For next-generation injectables, both companies are pursuing major follow-ups.

• Lilly’s retatrutide achieved 24% weight loss in Phase 2, while Novo’s CagriSema reached 22.7% in Phase 3, slightly below expectations but still a strong result.

• Novo expects to file for FDA approval in early 2026, with potential launch in 2027, while Lilly’s retatrutide may reach the market slightly sooner.

Separately, Novo’s cagrilintide monotherapy achieved 12% weight loss at 68 weeks, serving as a complementary treatment for patients who do not tolerate GLP-1s well.

Together, these programs highlight that Lilly’s lead is not massive nor definitive.

• Novo Nordisk remains well positioned to defend and potentially regain share in a market that continues to expand at record pace.

Commercial and Access Tailwinds

Novo Nordisk is also rapidly expanding its coverage network.

On July 1, 2025, CVS Caremark, the largest U.S. pharmacy benefit manager, made Wegovy the preferred GLP-1 obesity drug on its major formularies.

The shift was immediate.

• A CNN–Truveta analysis found that roughly 1 in 10 Zepbound users switched therapies, with over 80% moving to Wegovy.

• Zepbound’s prescription growth slowed sharply, while Wegovy saw its strongest monthly increase in more than a year.

• CVS spokesperson David Whitrap recently said that 97% of weight-loss prescriptions are now being filled with Wegovy.

• While it was downplayed at first, Lilly’s CFO later acknowledged the CVS deal as a clear headwind to Q3 U.S. volumes in the Q2 earnings call.

• Because of this change, there is a strong likelihood that we could see Wegovy growth pick upwards in Q3.

Beyond CVS, Novo partnered with Ro, LifeMD, Costco, and GoodRx, offering Wegovy at $499 per month through NovoCare.

• These partnerships improve access for uninsured and cost-sensitive patients while strengthening Novo’s retail and telehealth presence.

Internationally, Novo announced a $1.1B investment in Brazil to expand production and launched Wegovy in China (Nov 2024) and India (Jun 2025).

• The company now commands about 71% of the global GLP-1 market, maintaining a dominant position worldwide.

While Lilly’s growth and efficacy remain strong, Novo’s regulatory lead, brand strength, early oral entry, broad partnerships, and international dominance provide durable levers for recovery and long-term growth.

2/ Compounded GLP-1s

Compounded versions of semaglutide eroded branded volumes throughout 2024 and early 2025.

That dynamic is now shifting in Novo’s favor.

After the FDA banned compounding semaglutide in May 2025, branded prescriptions began to rebound.

• IQVIA data shows new Wegovy prescriptions up 33% between May 22 and July 18, 2025, while Zepbound’s prescription lead narrowed from 175,000 to 133,000 during that same time frame.

• Although this is a short window and excludes Novo’s DTC sales, it signals a clear recovery trend.

Regulatory pressure is also increasing.

• On September 16, 2025, the FDA issued warning letters to more than 50 compounding pharmacies and telehealth companies, including Hims & Hers, for selling unapproved GLP-1s and making misleading claims.

• The letters demanded immediate corrective action and warned of potential product seizures or injunctions for non-compliance.

• These enforcement efforts should help curb the compounded market and support a steady rebound in branded prescriptions.

Still, telehealth convenience operates in a regulatory grey zone and could remain a challenge if enforcement weakens.

However, there are growing indications that the tide is shifting in Novo’s favor.

3/ Guidance Reset, Capital Investments, and Operational Realignment

Novo Nordisk cut its 2025 guidance twice, reducing sales growth expectations from 17% to 11% and operating profit growth from 20% to 7% after restructuring and layoffs.

While these revisions hit sentiment hard, they may mark the beginning of a reset rather than a decline.

• If management can now deliver consistent execution and quarterly beat-and-raise performance, credibility can rebuild quickly.

• Massive capital investments, including the $11.7B Catalent site acquisition, should ease supply constraints and support scalability over the long term.

Additionally, Novo Nordisk plans to cut its workforce and invest the savings into drug development is likely to help the company operate learner, more efficiently, and at an accelerated rate.

• A third guidance cut would severely damage credibility, but if the company meets its revised 7% profit target, the narrative could shift toward stabilization, recovery, and ultimately, future growth.

4/ Leadership Transition and Strategic Direction

Novo Nordisk’s leadership change raised questions, though not all concern is warranted.

New CEO Mike Doustdar, a 30-year company veteran, has deep roots in Novo’s culture and long-term strategy.

• He previously led international operations, where sales more than doubled under his leadership, demonstrating his ability to execute at scale.

• His promotion signals continuity for a company known historically for discipline, patient focus, and operational excellence.

At the same time, Doustdar brings a renewed sense of urgency to a company that had grown comfortable in its leadership position.

• In once of his first statements as CEO, he emphasized “a sense of urgency, a laser focus on high performance, and a fierce determination for Novo Nordisk to aim higher than it ever has.”

He has already begun making strategic moves.

Under his leadership, Novo completed its first acquisition, the $5.2B purchase of Akero Therapeutics, to expand its cardiometabolic portfolio beyond GLP-1s.

• Akero’s lead candidate, EFX, targets MASH (metabolic-associated steatohepatitis) and is the only therapy to show meaningful regression in liver damage from cirrhosis.

• While Wegovy recently received approval for MASH, EFX could complement it as a combination therapy, positioning Novo as a broader leader in metabolic disease.

Novo also recently signed up to a $2.1B licensing agreement for zaltenibart, an experimental treatment for rare blood and kidney disorders that inhibits a protein in the immune system to stop it from attacking healthy cells.

Overall, these transactions mark a shift towards seeking greater therapeutic diversification.

It is too early to judge, but Doustdar’s early decisions reflect a leadership style built on urgency as well as portfolio expansion, a welcome change from the prior culture of caution and slow execution.

5/ Regulatory and Policy Risks

While U.S. policy reform remains a key uncertainty, Novo Nordisk has several levers that could help offset future pricing pressure.

The company’s growing U.S. manufacturing base provides insulation from potential trade or tariff risk.

• Its Clayton, North Carolina facility recently received a $4.1B expansion, and the Catalent acquisition further increased domestic capacity.

• This footprint not only strengthens supply resilience but could also satisfy potential “Buy American” policy requirements.

The company may also explore arrangements similar to Pfizer’s “TrumpRx” discount model, offering select drugs at lower prices through NovoCare, a move that could protect market access while maintaining volume.

Additionally, Novo’s export position provides a structural advantage.

• CFO Karsten Knudsen noted that Novo now exports more semaglutide from the U.S. than it imports, giving the company a favorable trade balance compared with peers.

More recently, Novo Nordisk appointed U.S. pharmaceutical executive and veteran Greg Miley as its new global head of corporate affairs.

• Reuters reported that the move is aimed to leverage Miley’s deep U.S. pharmaceutical experience to improve Novo’s relations with the Trump administration.

6/ Massive Growth Runway and Emerging Catalysts

Market Expansion

The global obesity market remains in its early innings.

Morgan Stanley projects the weight-loss medication market could reach $150B by 2035, up from the $15B figure in 2024.

• Today, the adoption rate is roughly 3% in the U.S. and only 1% internationally.

• Estimates show those figures could jump to 20% of eligible patients in the U.S. and 10% in other countries.

• This would translate to 11% of the global eligible population of 1.3 billion people.

The market remains significantly underpenetrated, with tremendous room for new patient adoption.

Patent Protection and Product Longevity

Novo’s current patent protection through 2031 in the U.S. and Europe provides several years of exclusivity in its most profitable markets.

• In China, Brazil, and India, patents expire between 2026 and 2027, but early brand establishment and complex manufacturing processes should limit immediate erosion from generics.

Additionally, Novo continues to invest heavily in next-generation injectables and oral delivery systems, which should extend patent life and preserve its GLP-1 leadership.

Therapeutic Optionality and Pipeline Catalysts

Beyond obesity, the GLP-1 drug class has evolved into a broader platform for metabolic and longevity-related therapies.

Researchers in Switzerland project GLP-1s could reduce all-cause mortality by 6.4% in the U.S. by 2045, highlighting their wider health impact.

Novo is also testing semaglutide in two large Phase 3 trials for early-stage Alzheimer’s disease, with results expected by late 2025.

• The company’s earlier GLP-1, liraglutide, slowed cognitive decline by 18% over one year and reduced brain volume loss by nearly 50% in memory-related regions.

• Given semaglutide’s stronger efficacy, the potential for improved outcomes is credible.

• A Case Western study of nearly 1 million diabetes patients found semaglutide users had a 70% lower risk of first-time Alzheimer’s diagnosis versus insulin, 60% versus metformin, and 40% versus other GLP-1s.

Analysts view this as a high-risk, high-reward catalyst.

• Morgan Stanley assigns a 25% probability of success, projecting a 15% stock upside on positive results and a 10% downside on failure.

• UBS sees a 10% probability, but estimates up to $15B in annual incremental revenue if successful.

Beyond Alzheimer’s, Novo is studying GLP-1 applications for polycystic ovary syndrome, sleep apnea, osteoarthritis, peripheral artery disease, and asthma.

IQVIA real-world data suggests GLP-1 therapy offers meaningful risk reduction across multiple conditions, supporting the case for continued R&D expansion.

Innovation and Long-Term Tailwinds

Novo’s foundation ownership structure enables patient, long-term capital allocation, prioritizing sustained innovation over short-term profit optimization.

• As Daniel Bohsen, Novo Nordisk’s Senior Vice President of Finance Operations, explained, the company has been active in obesity care for more than two decades, and emphasized, “Rather than focusing on market share, our efforts are to expand the market, including serving the oral segment within anti-obesity medicine.”

In parallel, Novo is integrating artificial intelligence into its research pipeline through a partnership with Nvidia and the Danish Center for AI Innovation.

• The collaboration provides access to the Gefion AI supercomputer, accelerating drug discovery and molecular design across metabolic and cardiovascular targets.

6. Risk Radar

Novo Nordisk’s long-term success depends on innovation speed, manufacturing execution, affordability, and the ability to sustain differentiation as the market matures.

Each of these structural factors below poses meaningful risk that could alter the investment thesis if not managed effectively.

Regulatory and Policy Risks

Policy headwinds represent the largest overhang for Novo Nordisk’s valuation.

Under the Inflation Reduction Act (IRA), negotiated Medicare prices for Ozempic, Rybelsus, and Wegovy will take effect in 2027, giving Novo roughly one year to adapt pricing and contract structures.

Additionally, there is mounting pressure from the administration to reduce GLP-1 drug costs.

To frame potential downside, we can calculate conservative, back-of-the-envelope, high-end estimates.

• Assuming U.S. revenue of $28B, with GLP-1s accounting for 80%, a 15% Medicare share, and a 50% price cut, the direct Medicare impact would equal roughly $1.7B, or 6% of U.S. sales.

• This figure represents an immediate hit to Novo’s top line once the new pricing takes effect in 2027, and the IRA’s effect on profitability is likely to be even more significant.

• This represents my “worst-case estimate” of the IRA's direct impact on Medicare revenue, as Medicare does not cover prescriptions solely for obesity due to a statutory exclusion, thereby reducing the portion of GLP-1 sales impacted by negotiated prices.

• However, the FDA's approval of Wegovy for cardiovascular risk reduction expands the number of prescriptions eligible for Medicare coverage and the IRA-negotiated price.

• The actual impact on revenue will depend on the split of prescriptions between covered and non-covered indications, which is very difficult to estimate or predict, but estimates show there is a high comorbidity between obesity and cardiovascular disease.

Additionally, commercial spillover is highly likely.

Once a lower maximum fair price is established for Medicare, private insurers and PBMs will gain leverage to demand similar discounts.

• If private payers apply comparable reductions, a 50% commercial spillover effect could result in an additional 2–5% annual drag on total sales, assuming a linear rollout.

• The actual impact from commercial spillover is also difficult to estimate as they depend heavily on the specifics of PBM negotiations, but we could expect that the commercial impact would phase in gradually over two to four years following the Medicare pricing shift in 2027.

All that being said, several factors could help offset the impact.

• While the negotiation process is ongoing, Novo is likely pursuing value-based reimbursement contracts, where pricing aligns with proven health outcomes such as reduced cardiovascular risk or hospitalizations.

• Lower prices could also drive higher prescription volume, supporting adoption, accessibility, and affordability.

• Additionally, continued manufacturing efficiencies and capacity expansion could help offset part of the impact over time.

With Medicare pricing enforcement delayed until 2027, Novo has time to restructure payer contracts and refine its operating model to preserve profitability.

Still, the IRA remains a credible and material impact that could weigh on margins if mitigation efforts underperform or lower prices do not drive higher volume.

Operational Risk

Just last week, the FDA issued an Official Action Indicated (OAI) classification for Novo’s recently acquired Indiana manufacturing plant, citing equipment failures, contamination, and insufficient investigation procedures.

• The site, acquired through the Catalent deal, is a core part of Novo’s plan to expand GLP-1 production in the U.S.

• The OAI classification is the FDA’s most severe compliance rating and generally halts new product approvals until full remediation is achieved.

If not addressed immediately, this could delay production and limit Novo’s ability to meet accelerating GLP-1 demand, which ultimately, would impact shareholder returns.

Affordability and Adherence

Cost has the potential to become a critical barrier to long-term adoption.

• GLP-1 therapies carry high retail prices, driven by factors like recouping substantial R&D costs, achieving a return on investment under patent protection, and general market dynamics.

• Additionally, discontinuation rates for these drugs have been observed to be significantly higher in the real world than in controlled clinical trials, with some research showing rates above 50%.

This can be attributed to challenges with affordability and adherence, rather than the lower rates (as low as 7%) observed in controlled settings.

As a result, real-world market penetration could fall short of the total addressable market if out-of-pocket costs remain high and if patients aren’t adequately educated on the need to continue treatment.

Patent and Innovation Dependency

Patent protection for Novo’s core GLP-1 products extends through 2031 in the U.S. and Europe but expires sooner in key international markets.

• Once exclusivity ends, Novo’s moat will depend entirely on the speed and effectiveness of its innovation cycle.

• The company must continue delivering next-generation formulations and novel delivery mechanisms to defend margins against eventual biosimilar entry.

Litigation and Long-Term Safety

Widespread use of GLP-1 therapies introduces uncertainty around long-term safety outcomes.

• Any confirmed link to serious complications could trigger litigation, labeling changes, or lower physician confidence, directly pressuring sales and reputation.

• Safety and litigation remain tail risks that could weigh on sentiment and valuation if adverse findings emerge over time.

7. Valuation

Analyzing Novo Nordisk from a valuation perspective, we see that the company is trading near intrinsic value, or is undervalued depending on the model used.

1/ Forward PE vs Historical Median

On a forward P/E basis, Novo Nordisk trades at 14.7x, roughly a 35% discount to its historical median of 22.7x and near its lowest level in the past decade.

Forward P/E provides a quick pulse check on valuation sentiment, and by that measure, investor expectations for Novo remain significantly subdued.

The multiple has compressed to a more sensible level after previously reaching 43x during the height of market optimism, when expectations outpaced fundamentals and exuberance took hold.

2/ Discounted Cash Flow

While DCFs come with inherent uncertainty, they offer a valuable lens for assessing long-term intrinsic value.

As Warren Buffett famously said, “It is better to be approximately right than precisely wrong.”

Novo Nordisk’s reported free cash flow for 2025 is expected to fall to $6.8B, likely representing the high end of its current manufacturing expansion cycle.

To estimate steady-state earning power, 2025 free cash flow was normalized using management’s guidance that capital expenditures will remain in the low double-digit range relative to sales.

• At a 10% CapEx-to-sales assumption, and treating stock-based compensation as a true expense, normalized free cash flow is estimated at $12.5B, or $2.81 per share.

• For context, Novo’s free cash flow has grown at an 8% CAGR over the past decade, which includes the heavy investment period, while operating cash flow has grown at a higher 12% CAGR.

Our model yields a fair value of $54.73 per share, roughly in line with the current price of $54.37, suggesting the stock is trading near intrinsic value with conservative assumptions.

• These assumptions intentionally incorporate a margin of safety, cushioning for factors such as higher capital intensity, potentially slower adoption or growth, and the impact of regulatory and policy headwinds that could pressure margins and cash flow.

Deeper value emerges below $50 per share, where the implied long-term compounding rate rises materially above 11% and offers a more compelling margin of safety.

8. Final Take

Contrary to popular belief, it is not the end of the world for Novo Nordisk.

Many of the company’s current challenges are temporary and actively being addressed.

• Novo is expanding its manufacturing footprint to resolve supply constraints, which should strengthen scalability and support global distribution.

• It is also confronting compounding head-on, backed by stronger FDA enforcement, while building direct-to-consumer partnerships that expand access and reinforce brand visibility.

Beyond execution, Novo retains meaningful structural advantages.

• The company holds the broadest set of regulatory approvals across obesity and metabolic conditions, enjoys strong brand recognition, remains the first to market in oral GLP-1 therapies, and continues to aggressively invest in R&D.

• It's partnership with a major PBM like CVS further anchor its reach and market presence.

Still, tangible risks remain.

• Negotiated medicare prices could compress margins, while FDA scrutiny of newly acquired manufacturing facilities may delay full production output if not resolved promptly.

Both represent credible threats that could limit short-term upside if mishandled.

From a valuation standpoint, the setup looks balanced but favorable.

• At roughly 15x forward earnings, Novo trades at a discount to the broader market’s 23x and Eli Lilly’s 30x multiple.

• The company also pays a 3.2% dividend that has grown at an incredible 22% growth rate over the past 5 years.

Additionally, health care equities trade at historically depressed levels, which, in a potential downturn, could benefit from the sector’s defensive nature.

• Meanwhile, Novo Nordisk has direct exposure to one of the decade’s strongest secular growth themes.

Longer term, Novo’s expanding pipeline, including late-stage GLP-1 trials targeting Alzheimer’s and other metabolic disorders, provides asymmetric upside, where success could be transformative but failure carries limited structural downside.

With low expectations, a reasonable valuation, and credible pathways to restore growth, Novo Nordisk offers a balanced opportunity where patience is likely to reward investors with returns exceeding broader market averages.

I am long $NVO.

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