Why Novo Nordisk Stock Just Hit a 4-Year Low

The share price of Danish pharmaceutical giant Novo Nordisk (NYSE: NVO) hit a four-year low Monday, falling below $44 a share in early trading, a level the stock hasn't seen since July 2021.

What's driving the drugmaker's share price fall?

GLP-1 drugs become a catalyst

For several years now, Novo Nordisk has been a leader in the exploding market for GLP-1 drugs that can effectively treat type 2 diabetes and obesity. Sales of its two main drugs -- Ozempic for diabetes and Wegovy for weight loss -- made Novo Nordisk Europe's largest company by market capitalization, and a stock market darling.

Those two branded drugs are in fact the same, semaglutide. It works by lowering blood sugar, slowing digestion, and reducing appetite.

And the market for such drugs is exploding. The global GLP-1 market was valued at about $52 billion in 2024. That's expected to balloon to $187 billion by 2032, a compound annual growth rate of almost 17%. And that's a conservative estimate -- some projections of the market's growth are considerably higher.

Image source: Getty Images.

New uses for GLP-1 drugs

But GLP-1 drugs are so effective at treating diabetes and obesity that they're now being evaluated for a host of other conditions, including cardiovascular disease, chronic kidney disease, liver disease, sleep apnea, substance abuse disorders, and neurodegenerative disease, among others.

It's that last one -- neurodegenerative disease -- that pushed Novo Nordisk's stock lower this week. The company has been testing semaglutide's effectiveness in slowing the progression of early-stage symptomatic Alzheimer's disease. Tests even reached a third trial.

But things didn't work out. On Monday, the company issued a press release entitled: "Evoke phase 3 trials did not demonstrate a statistically significant reduction in Alzheimer's disease progression." The drug did no better in reducing the progression of the disease than a placebo. So Novo Nordisk is discontinuing trials.

To be fair, treating Alzheimer's with semaglutide was always a long shot. Novo Nordisk itself had called the idea a "lottery ticket."

A series of misfortunes has plagued Novo Nordisk

But this latest news just puts an exclamation point on the company's 2025 woes, which collectively have pushed the once-darling stock down 48% so far this year.

The company has been steadily losing market share to competitor Eli Lilly (NYSE: LLY) in the white-hot GLP-1 market. In fact, Lilly claimed its share of the market for GLP-1-based drugs climbed to 58% year over year in the third quarter. Lilly is the clear winner -- for the moment, at least -- in the GLP-1 drug contest. And as investors have woken up to this, they briefly pushed its market cap to $1 trillion last week.

While Lilly's share price has since receded a bit, its market cap is still about 5 times that of Novo Nordisk. Lilly's stock is up 42% this year, wildly outperforming not only Novo Nordisk, but also the broader market (the S&P 500 index is up 15.5% year to date).

Plus, in a desperate quest to find new GLP-1 drugs to bring to market, Novo Nordisk and rival Pfizer (NYSE: PFE) recently engaged in a bidding war for biotech start-up Metsera, a next-generation, clinical-stage biopharmaceutical company that's developing several obesity treatments.

One of Metsera's drug candidates, MET-233i, can be taken less frequently than the Novo Nordisk and Eli Lilly drugs, and has proven highly effective -- it helped patients in one study to lose 8.4% of their body weight in 36 days.

But on Nov. 7, Metsera's board abruptly ended the bidding war by choosing Pfizer's latest bid, leaving Novo Nordisk out in the cold.

The battle is not yet over for the GLP-1 market

The race to win a significant share of the GLP-1 market -- and to find new uses for the drugs -- is far from over. That's in part because obesity is a chronic disease that can lead to or exacerbate many other health issues, from heart disease and high blood pressure to diabetes to sleep apnea -- and even some cancers.

Novo Nordisk performed well early in the battle for the GLP-1 market. It's now down, but probably not yet out.

Matthew Benjamin has positions in Novo Nordisk. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.