Where Will Novo Nordisk Be in 5 Years as the GLP-1 Market Gets More Crowded?

Several years ago, Novo Nordisk (NYSE: NVO) -- which is now branding itself as Novo -- was performing so well that it was improving the entire economy of its home country, Denmark. The company was riding the wave of soaring demand for its GLP-1 medicines, Wegovy and Ozempic. However, Novo Nordisk has lost significant market value due to stiff competition in its core market, primarily from a single company, Eli Lilly (NYSE: LLY).

Here's even worse news: Over the next few years, more GLP-1 therapies will enter the market seeking to challenge Novo Nordisk. Can the company remain a leader in this industry and perform well over the medium term? Let's find out where Novo Nordisk might be in five years.

Image source: The Motley Fool.

Novo Nordisk's pipeline

Novo Nordisk's GLP-1 lineup also now includes an oral version of Wegovy, which it launched in January. The company could soon earn approval for CagriSema, a next-gen combination treatment for weight loss. While CagriSema performed better than semaglutide (the active ingredient in Wegovy) in clinical trials for weight loss, it was bested by the current market leader, Eli Lilly's Zepbound, in a head-to-head study.

Still, CagriSema should be a nice addition to Novo Nordisk's approved portfolio. And based on the company's pipeline, it should further expand its lineup over the next few years. Novo Nordisk has two very promising mid- and late-stage candidates. One of them, Amycretin, is being investigated in phase 3 studies as subcutaneous and oral formulations for chronic weight management.

Amycretin posted a mean weight loss of up to 24.3% in an early stage, 36-week study. These are fantastic results, and if it can post similarly strong weight loss in longer clinical trials that enroll more people, the medicine could easily become one of the leaders in the market. Novo Nordisk is also developing UBT251, a therapy it licensed from a China-based company; in a phase 2 study in China, UBT251 delivered an average weight loss of up to 19.7% over 24 weeks.

Again, excellent results. Novo Nordisk has other candidates, but these two are among the most exciting, and if both can eventually succeed in phase 3 clinical trials and earn approval, it would be a big deal.

The competitive landscape

Novo Nordisk's pipeline looks strong, but so does its main competitor's. Eli Lilly's retatrutide, its next-gen obesity medicine, posted outstanding phase 3 results and now looks destined for approval. Further, other pharmaceutical giants are looking to develop differentiated medicines that could appeal to patients for reasons other than strong efficacy.

For instance, AbbVie (NYSE: ABBV) and Amgen (NASDAQ: AMGN) are developing long-acting drugs that could be administered once monthly, compared with once-weekly for Zepbound and Wegovy. Pfizer's (NYSE: PFE) leading candidate, PF'3944, is being developed with the potential for less frequent dosing and competitive tolerability. And we have only scratched the surface. There are dozens of pipeline candidates across all phases of clinical trials. So, over the next few years, this area could become quite crowded.

Where is Novo Nordisk headed?

Despite increased competition, there are reasons to expect Novo Nordisk to remain one of the leaders in this industry. First, even in ruthlessly competitive areas of the pharmaceutical industry, such as oncology or immunology, several medicines generate billions in annual sales. The GLP-1 market is growing rapidly and can support multiple winners over the long run, especially as GLP-1 therapies increasingly earn approval outside of diabetes and obesity.

Novo Nordisk's own Wegovy was approved for metabolic dysfunction-associated steatohepatitis, Eli Lilly's Zepbound earned an indication in obstructive sleep apnea, and recent clinical trial results suggest it could also be used as a combination treatment to help patients with obesity and immunology diseases such as plaque psoriasis.

Second, most current clinical trial candidates won't make it to the market. Such is the rule in the pharmaceutical industry. Novo Nordisk has had its own setbacks, as have other companies. Third, Novo Nordisk has long-standing expertise in related areas, especially diabetes. It's probably no coincidence that the company that overtook it as the leader in the GLP-1 market is the one with which it has been competing in diabetes care for decades.

My view is that Novo Nordisk has a strong chance of launching several more GLP-1 therapies over the next five years, remaining a leader in the field, and posting much-improved financial results along the way. The company could also deliver competitive returns, especially for those who initiate positions today, given the beating the stock has taken over the past two years.

Prosper Junior Bakiny has positions in Eli Lilly and Novo Nordisk. The Motley Fool has positions in and recommends AbbVie, Amgen, Eli Lilly, Novo Nordisk, and Pfizer. The Motley Fool has a disclosure policy.