Novo Nordisk's shares are seeing a significant decline due to considerable clinical trial failures and increasing rivalry within the market for weight-loss medications.
TL;DR
- Novo Nordisk shares dropped significantly due to clinical trial failures and market competition.
- Semaglutide failed to slow cognitive decline in Alzheimer's trials, impacting expansion hopes.
- Slowing sales growth, price cuts, and increased competition from Eli Lilly are concerns.
- Regulatory challenges, leadership shifts, and reduced profit forecasts contribute to a pessimistic outlook.
On Monday, U.S.-listed shares dropped more than 5%, reaching a four-year nadir of approximately $45. This decline continues a downward trend that has resulted in the company's value diminishing by almost half since the start of 2025.
The primary reason for this downturn was the disclosure that semaglutide, the essential component in Novo Nordisk's highly successful medications Ozempic and Wegovy,failed to slow cognitive deterioration in two major clinical trials addressing Alzheimer’s disease.
The EVOKE and EVOKE+ trials yielded results indicating no substantial benefit compared to a placebo, diminishing expectations that the firm might extend its diabetes and obesity business into neurodegenerative conditions.
“While treatment with semaglutide resulted in improvement of Alzheimer’s disease–related biomarkers in both trials, this did not translate into a delay of disease progression,” the company said.
Skepticism from analysts had been growing, but this conclusive trial failure has eliminated immediate prospects for expansion through new uses.
Shareholders are wondering if outside purchases can compensate for the company’s pipeline shortcomings. Novo Nordisk’s choice to invest $2 billion in licensing a GLP-1 weight-loss medication from China comes seen by analysts as a gamble following recent setbacks.
Slowing growth of highly successful medications
Novo Nordisk's future prospects are also obscured by persistent regulatory and pricing challenges, particularly with governments push for broader insurance coverage and reduced expenses for weight-loss therapies.
Prior to the trial setback, Novo Nordisk was already experiencing a deceleration in sales expansion for its top-selling obesity medications, Wegovy and Ozempic. Concerns have arisen regarding ongoing demand due to a decrease in U.S. Prescriptions and heightened rivalry from competitors such as Eli Lilly, whose comparable medication Zepbound is gaining market share is gaining traction.
Novo has been compelled to enact significant price reductions, initially due to roughly 50% to $499, followed by even further to $349, as a strategy to preserve its market position. Such reductions negatively affect profitability and signal difficulties in sustaining expansion.
The financial markets are also responding to notable shifts in leadership and workforce reductions, with recent reductions in forecasts for sales and operating profit expansion contributing to a pessimistic outlook. This follows as expenses from reorganization and write-downs of devalued assets have continued to depress profits.
Profitability also saw a substantial decrease in gross margin, as increased expenses related to sales, distribution, and continuous capacity growth placed further pressure on earnings.
Coins2Day’s Vivienne Walt asked in March whether the company could find its next blockbuster drug before the boom ended, and that is still an open question.
For this story, Coins2Day generative AI assisted in creating the initial draft, which an editor then reviewed for accuracy prior to publication.