To The Moon

$Novo-Nordisk A/S(NVO)$

Shares of Novo Nordisk A/S dropped sharply—losing around 23% in just one session—as the company issued its second profit warning of 2025. The unexpected cut to full‑year sales and operating profit guidance marks a turning point for the Danish pharmaceutical giant, casting doubt on its ability to maintain dominance in the high-stakes U.S. obesity drug market. With increased competition from Eli Lilly and a surge in unauthorized “compounded” versions of its blockbuster weight‑loss therapies Ozempic and Wegovy in the U.S., investor confidence has plummeted overnight.

Performance Overview and Market Feedback

Novo Nordisk now expects full‑year sales growth of 8–14%, down sharply from its previous projection of 13–21%. Operating profit growth has been revised to 10–16%, previously guided at 16–24%. These downgrades reflect mounting competitive pressures, particularly in the U.S., where compounded semaglutide versions and rival GLP‑1 treatments are eroding both market share and pricing power.

Despite an 18% sales increase in constant currency during the first half of 2025 and a 29–40% rise in operating profit, investors reacted negatively to the tone of the revisions. A combination of slowing growth expectations for Wegovy in the U.S., softer uptake of Ozempic in the U.S. diabetes market, and underwhelming performance in certain international markets triggered the sudden sell‑off.

The stock slide erased over €60–80 billion in market capitalization at one point—equivalent to $90 billion—marking the worst trading day for Novo since the 1987 Black Monday crash. Shares bottomed at a three‑year low before recovering slightly, ending the day down roughly 20–21%. This steep decline reflects both shock at the profit warning and broader recalibration of the steep valuations that had been built around Novo’s GLP‑1 leadership.

Subheading: Competitive Dynamics and U.S. Market Struggles

The U.S. market, traditionally Novo’s crown jewel for obesity and diabetes therapies, is now ground zero of disruption. Compounded (unbranded, unofficial) versions of semaglutide have flooded the market since early 2022, and despite FDA crackdowns in May, the supply and use of these knock‑offs remain persistent. Novo is engaged in litigation against compounding pharmacies and has publicly criticized telehealth firms like Hims & Hers for marketing unauthorized Wegovy copies under allegedly deceptive practices.

Meanwhile, Eli Lilly’s GLP‑1 drugs—Zepbound and Mounjaro—have achieved faster clinical and market traction, with prescriptions surpassing those of Wegovy by over 100,000 per week in midsummer. The competition is not only clinical but commercial: Lilly’s pricing and marketing execution in the U.S. has outperformed Novo, cutting into Novo’s first‑mover advantage.

Analysts describe Novo’s current position as a “show‑me” moment: the company must now deliver measurable growth in U.S. prescriptions—and margin recovery—in the coming quarters to restore investor faith.

Subheading: Internal Transition and Strategic Implications

In an immediate response to the crisis, Novo appointed Maziar Mike Doustdar, a 30‑year veteran who heads international operations, as its new CEO effective August 7. Doustdar will become the first non‑Danish CEO in the company’s history. He succeeds Lars Fruergaard Jørgensen, who was removed in May amid concerns about flagging U.S. performance.

Doustdar’s selection signals a renewed emphasis on global commercial execution and recovery in the U.S. market. He inherits urgent tasks: reviving Wegovy uptake in the U.S., countering compounded drug use through legal and regulatory channels, and shoring up global market share against rivals. The CEO transition adds to market uncertainty but also brings long‑tenured leadership attuned to Novo’s internal culture and strategic DNA.

Investment Highlights

1. Long‑Standing Leadership in GLP‑1 Therapy

Novo Nordisk remains the originator of semaglutide therapy, with decades of IP, manufacturing scale, and regulatory experience. Wegovy and Ozempic still represent core growth engines, and the company boasts deeper international penetration than most competitors. Its manufacturing investments—including expansion in North Carolina and strategic partnerships like Catalent—continue to underpin supply resilience.

2. Market Correction Reflects Premium Reset

The share plunge wipes out most of the premium valuation built into Novo during the GLP‑1 boom. At its 2024 peak, Novo had a valuation above €600 billion; the collapse now places the stock at its lowest level in three years. While still commanding a premium relative to peers, the current valuation now factors in growth risks and multiple layers of uncertainty.

3. Legal and Regulatory Defenses Underway

Novo has launched legal action against compounding pharmacies and terminated partnerships with telehealth firms accused of marketing copycat versions. A sustained U.S. FDA crackdown may eventually reduce unauthorized supply and bolster branded drug demand. But these efforts face legal, regulatory, and public‑relations hurdles.

4. Emerging Leadership with Market Execution Challenge

Doustdar’s promotion reflects a bet on internal continuity with commercial acumen. His challenge: to reassert Wegovy’s momentum in the U.S., rebuild market share abroad, and redefine competitive positioning vis-à-vis Lilly and other GLP‑1 entrants. Early signs under his leadership will likely influence sentiment sharply.

5. Pipeline Depth and Diversification Potential

Beyond GLP‑1 therapies, Novo’s pipeline includes dual-agonists like CagriSema, oral semaglutide variants, and candidates targeting NASH, CKD, and Alzheimer’s biomarkers. While these projects offer long-term upside, none are near commercialization; thus the immediate valuation rests heavily on GLP‑1 performance.

Subheading: Risks, Threats, and Market Sentiment

The risks facing Novo include:

• Rising competition in GLP‑1 therapies, with better efficacy data and insurance access favoring Lilly and others.

• Persistent compounded versions of Wegovy in the U.S., which may dampen demand for branded versions even after FDA bans.

• Sluggish penetration in international markets like Germany and EMEA, which now show slower Wegovy uptake.

• Valuation sensitivity, as the stock price remains tied to growth projections and investor sentiment; any further guidance downgrades could trigger more downside.

• Regulatory and pricing pressures in the U.S., amid political scrutiny of drug prices, especially for obesity therapies.

Investors now question whether Novo’s previous guidance was overly optimistic, and whether the company’s strategic initiatives—notably its legal crackdown and CEO transition—can reverse the downward momentum.

Verdict: Entry Price August 2025 — Buy, Sell or Hold

Given the updated outlook, sudden valuation decline, and fresh leadership at the helm, the appropriate stance for new entrants in August 2025 is Hold with Caution.

At current share levels—which reflect a steep reset in expectations—Novo may offer long‑term value if U.S. prescription momentum reaccelerates and compounded drug pressures ease. However, without clear near‑term visibility and amid volatile competition, the risk‑reward profile remains asymmetric.

A more compelling entry point would fall within the €85–€95 range (or equivalent in Danish krone / ADR pricing), corresponding to a forward P/E multiple closer to 30‑35x, better aligned with conservative growth assumptions and Nokia safety margins.

Verdict: Hold. Investors already positioned should monitor U.S. prescription trends, pricing developments, and early performance under new CEO Doustdar. Aggressive buyers may consider staggered entry if the company delivers stabilization in guidance and share recovery.

Conclusion and Takeaways

Novo Nordisk’s 23% share plunge—triggered by a blunt profit warning and intensifying U.S. competitive dynamics—marks a critical inflection for the former GLP‑1 highflyer. While fundamentals remain strong, confidence has cracked, and investors are demanding delivery over promises.

Key takeaways:

1. Second profit warning in 2025 slashed sales and profit guidance, reflecting stalling Wegovy and Ozempic growth.

2. U.S. market complications—from compounded drug copies to loss of prescription momentum—are at the core of the turnaround challenge.

3. New CEO appointment underscores urgency; Maziar Mike Doustdar faces near-immediate expectations to restore growth at scale.

4. Valuation re‐rating provides risk premium cooling, but deeper downside exists if competitive or regulatory pressures intensify.

5. Strategic patience is required: investors should wait for signs of prescription stabilization, pricing power recovery, and financial discipline before committing fresh capital.

Novo remains a titan of the GLP‑1 era—but the market now demands evidence over hype. In the coming quarters, all eyes will be on how quickly Wegovy can rebound in the U.S., how effectively Novo counters compounded competition, and whether new leadership can re‑energize its global franchise.

For now, investors should navigate with caution, watching for the turnaround signals that may eventually restore Novo Nordisk’s standing as a long‑term growth bet.