After being suppressed by Eli Lilly for two years, how does Novo Nordisk counterattack:

# Source: Wall Street Insights

After enduring the darkest hour of a halved stock price and losing its crown as the "King of Weight-loss Drugs", Danish pharmaceutical giant Novo Nordisk is attempting to regain market dominance through a bold political gamble and accelerated product strategy.

Faced with the intensifying pressure from its formidable rival Eli Lilly, Novo Nordisk's new management has opted to sacrifice part of its profit margins in exchange for tariff exemptions and regulatory green lights from the U.S. government, striving to seize the first-mover advantage in the competition for next-generation oral medications.

According to Bloomberg, Novo Nordisk has reached a key agreement with the Trump administration: the company has agreed to drastically cut the prices of its blockbuster weight-loss drugs under U.S. Medicare and Medicaid programs, while also reducing the direct consumer prices. In return, Novo Nordisk has secured a three-year exemption from drug import tariffs, and its high-dose Wegovy injection has been granted fast-track review status by the U.S. Food and Drug Administration (FDA).

This strategy has quickly translated into tangible market advantages. The FDA approved Novo Nordisk's new drug application for oral Wegovy in December, and the company plans to officially launch the product in the U.S. in January 2026. This means Novo Nordisk will gain a roughly three-month lead over Eli Lilly in the crucial oral weight-loss drug battlefield, as the latter's competing product is not expected to receive approval until March next year.

Boosted by this news, Novo Nordisk's share price has rebounded by more than 9% in recent trading sessions.

While the price concessions may dampen sales growth in the short term, investors are re-evaluating the valuation logic of this European pharmaceutical giant.

Throughout 2025, Novo Nordisk's share price plummeted by over 50% due to disappointing clinical trial results and Eli Lilly's Zepbound demonstrating superior weight-loss efficacy. The recent compromise with the White House and the accelerated launch of new drugs are viewed by the market as a do-or-die attempt by the company to reverse its declining fortunes and leverage the "first-mover advantage" to fend off competitors ahead of the looming patent cliff.

## Trading Price for Volume: A "Political Deal" with the White House

Since assuming office, President Trump has targeted the sky-high prices of prescription drugs in the U.S., demanding that pharmaceutical companies sell directly to patients and align prices with international levels.

Against this backdrop, both Novo Nordisk and Eli Lilly reached price-cut agreements with the Trump administration in November. According to White House officials, not only will the government procurement prices be reduced, but the direct-to-consumer (DTC) prices of Ozempic and Wegovy will also be lowered.

As a policy dividend for the price cuts, the scope of insurance coverage for weight-loss drugs will be significantly expanded. Previously, the program only covered obese patients with specific complications such as cardiovascular diseases; under the new regulations, the coverage criteria will be relaxed to include overweight individuals with prediabetes.

For Novo Nordisk, the core value of this deal lies in the dual benefits of defense and offense: the three-year import tariff exemption eliminates trade war risks, while the accelerated approval of high-dose Wegovy aims to narrow the efficacy gap with Eli Lilly's Zepbound.

The company acknowledges that the agreed-upon low prices may pressure global sales growth next year, but in the fierce duopoly competition, this has earned it a valuable strategic buffer period.

## Racing Ahead with Oral Drugs: A Three-Month Time Window

As competition in the injectable drug market intensifies, oral formulations are regarded as the next frontier in the weight-loss drug market, thanks to their greater ease of use for patients and lower production costs. Novo Nordisk is currently fully betting on the oral version of Wegovy, set to launch in January 2026.

This timing is crucial. According to analyst consensus compiled by Bloomberg, Eli Lilly's competing oral drug is expected to receive approval in March. Novo Nordisk's new CEO Mike Doustdar stated that the company has prepared "more than sufficient" pill inventory for the launch and confirmed that it is in the early stages of a new round of preliminary negotiations with telemedicine platform Hims & Hers Health Inc. regarding the sales of the oral drug, to expand its distribution channels.

Investors are closely watching whether Novo Nordisk can leverage these months of "vacuum period" to build brand loyalty. Sebastien Malafosse, portfolio manager at Edmond de Rothschild Asset Management, pointed out that the company has "learned its lesson" this time and is expected to execute far better than the chaotic launch of Wegovy injection back in 2021.

Gregoire Biollaz, senior investment manager at Pictet Asset Management, believes that if the approval and launch proceed smoothly, the high-dose injection and oral drug will serve as key catalysts for the stock price recovery.

## Valuation Reshaping: Reflections After the Darkest Hour

Novo Nordisk's market performance in 2025 was nothing short of disastrous. Due to misjudging market demand, which led to supply chain disruptions, coupled with disappointing clinical data from its next-generation candidate drug CagriSema—whose weight-loss efficacy only matched, but did not surpass, Eli Lilly's Zepbound—the company suffered its worst year ever in terms of stock price, erasing nearly all the gains accumulated over the previous several years.

However, the sharp decline has also brought Novo Nordisk's valuation back to a highly attractive range. Currently, its forward price-to-earnings ratio stands at approximately 14 times, only half of its five-year average, and more than 10% cheaper than the MSCI World Pharmaceutical Index.

In a report last week, Berenberg analyst Kerry Holford wrote that the current stock price barely factors in the value of its drug pipeline, and given the company's strong track record of R&D returns, this valuation level is clearly too low.

Nevertheless, long-term concerns persist. The U.S. patents for semaglutide—the core ingredient in Wegovy and Ozempic—are set to expire in 2032. Paul Major, portfolio manager at Bellevue Asset Management, warned that unless investors see convincing new catalysts to support future growth, the market's confidence in the company will take time to recover, as the current pipeline lacks any surprises.

## Cracking Down on Generics: Winning Back Millions of Lost Users

In addition to its head-on confrontation with Eli Lilly, Novo Nordisk must also tackle the massive generic drug market that has sprung up due to previous supply shortages. According to the company's November estimate, more than one million patients in the U.S. are using cheap generic GLP-1 drugs produced by so-called "compounding pharmacies".

Although the FDA announced the end of the semaglutide shortage in February 2025 and imposed restrictions on generic drug production starting from May, compounding pharmacies continue to sell their versions by exploiting regulatory loopholes (such as adjusting dosages or adding vitamin B12). To recapture this market share, Novo Nordisk launched its direct-to-patient platform NovoCare and significantly slashed prices.

The NovoCare platform offers deep discounts for self-paying users, with prices far lower than the original list prices of $998 for Ozempic and $1349 for Wegovy. This is a direct attempt by Novo Nordisk to squeeze the survival space of generic drugs through price wars and convert "black market" users into legitimate customers.

While its previous partnership with telemedicine company Hims & Hers collapsed in less than two months, through building its own channels and implementing new low-price strategies, Novo Nordisk is attempting to repair the market share damaged by insufficient production capacity.

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