Novo Nordisk (NVO) makes Ozempic, the best–known GLP-1 drug out today. And until quite recently, the Danish pharma giant consistently led the pack in new prescriptions, becoming virtually synonymous with a booming weight loss drug market that could hit $139 billion by 2030.
But things have soured since Novo Nordisk stock hit an all-time high last summer. The company has struggled to meet surging demand, ceding ground to both its Big Pharma rival Eli Lilly (LLY), and to smaller firms making compounded versions of weight loss drugs. Its pipeline of next-generation weight loss drugs has underwhelmed. And after the stock fell 50% in a year, Novo Nordisk CEO Lars Fruergaard Jørgensen resigned earlier this month.
So why is the maker of blockbuster diabetes and weight loss drugs that defined a new market now stuck chasing Eli Lilly?
Analysts say the rise of Eli Lilly’s Ozempic competitor Zepbound is just one facet in Novo Nordisk’s struggle to keep pace with its biggest rival.
In fact, the market’s transformation is just getting started.
Novo Nordisk launched its injectable GLP-1 semaglutide as Ozempic for diabetes in 2018 and Wegovy for weight loss in 2021. While these drugs followed Eli Lilly’s Byetta (2005) and Novo Nordisk’s Saxenda (2014), the hype around GLP-1s didn’t really pick up until 2022, when celebrity weight loss stories, TikTok influencers, and even Elon Musk helped make Ozempic a household name. Around then, Eli Lilly launched tirzepatide — an injectable that targets both GLP-1 and GIP receptors — branding it as Mounjaro for diabetes (2022) and Zepbound for weight loss (2023).
“The launch of Wegovy was probably the first issue that Novo ran into, because they really just couldn’t supply the market,” said Evan Seigerman, a managing director and senior analyst at BMO Capital Markets (BMO). He said the company “just didn’t fully understand what the demand for obesity medication was going to be.”
Then, as its American rival “was really working hard to build up supply [in 2024], it seemed that Novo was kind of faltering a bit,” Seigerman said.
Wegovy shortages made room in the market not just for Zepbound, but also for compounded knockoffs from Hims & Hers, Noom, and Ro under a temporary FDA allowance. But these telehealth companies only filled gaps in the market. They didn’t create them.
“I know Novo talks about the impact of compounded semaglutide, but I really think it goes down to the supply issues that created a permanent shift in the market,” Seigerman said. He also noted that Zepbound patients lose more weight than Wegovy patients, as head-to-head studies show.
Eli Lilly also seems more proactive about getting its marquee drug to priced-out patients. It started selling discounted Zepbound directly to consumers last August, targeting compounding patients and others without adequate insurance. Six months after Eli Lilly, Novo Nordisk followed with its own direct-to-consumer push.
In the first week of March, the number of new Zepbound prescriptions in the U.S. exceeded new Wegovy prescriptions for the first time, according to Reuters and clinical research firm IQVIA (IQV).
It’s not just the rising Zepbound and Mounjaro prescriptions. Novo Nordisk’s pipeline is also raising concerns.
In December, Novo Nordisk released key late-stage trial results for CagriSema, its next-generation weight loss drug that combines semaglutide and cagrilintide — the latter of which mimics the hormone amylin. Novo Nordisk said the treatment yielded 22.7% weight loss, missing its 25% forecast. Subsequent trial data disappointed investors in March.
The December results “didn’t look like bad data on the top line,” said Karen Andersen, Morningstar’s (MORN) healthcare research director. “But it was a huge disappointment given that the market was anticipating Novo to be able to leapfrog Lilly.”
Instead, Andersen said, Novo Nordisk delivered results that closely resembled existing GLP-1 drugs.
Since then, Novo has seemingly been “playing catch-up in terms of trying to find a higher efficacy product [and] an oral to compete with Lilly’s orforglipron,” said Seigerman, the BMO Capital Markets analyst.
Orforglipron is an experimental GLP-1 oral drug, and Eli Lilly said in April that it “demonstrated statistically significant efficacy results” in a Phase 3 diabetes trial. Investors await the pill’s Phase 3 trial results for obesity, which could come in the third quarter, Andersen said.
The daily pill could be huge, in part because of it would boost GLP-1 accessibility for needle-shy patients. The big GLP-1 drugs on the market today require an injection via a pre-filled pen, or a syringe and single-use vial.
A small-molecule oral drug such as orforglipron could be cheaper and faster to make, and “easier to scale,” Andersen said.
Investors are also watching for late-stage trial data on a stronger Eli Lilly shot — retatrutide. The company thinks the experimental drug could outdo tirepizide by targeting GLP-1, GIP, and glucagon receptors simultaneously.
Meanwhile, Novo Nordisk is doubling down on semaglutide — via Ozempic, Wegovy, CagriSema, and an oral version — rather than developing “something that’s truly novel,” Seigerman said.
Novo Nordisk stock has dropped more than 50% since its peak of $146 per share last June. The stock has fallen 21% so far this year, to about $69 per share. Eli Lilly stock is only down about 6% this year amid broader market woes.
Novo Nordisk has made some big moves recently. Earlier in May, it struck a deal with CVS (CVS) to make Wegovy Caremark’s preferred weight loss drug. Novo Nordisk also expects to benefit from a crackdown on compounded GLP-1s.
Then Novo Nordisk abruptly ousted CEO of eight years, Lars Fruergaard Jørgensen. The move reportedly surprised Jørgensen. Analysts were also surprised.
In announcing the leadership change, Novo Nordisk said it’s seeking a new CEO “in light of the recent market challenges” and the “development of the company’s share price since mid-2024.”
Translation: The CEO behind Novo Nordisk’s wildly profitable bet on weight loss drugs got axed for ceding hype and market share to Eli Lilly.
Yet even with its CEO headed for the door, Helge Lund, Novo’s board chair, said that “Novo Nordisk’s strategy remains unchanged as to the plans and initiatives we presented last week in connection with our first quarter financial announcement.”
The message has analysts perplexed.
“If the stock’s down 50% from your highs, how is that strategy working?” Seigerman said. “It might feel good to fire the CEO, but that doesn’t solve the issues that are causing the performance of your stock.”
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