Why Novo Nordisk Stock Is Sinking This Week
Key Points
Novo's third-quarter earnings and sales missed expectations.
The company is losing share of the anti-obesity drug market to competitors.
A fierce bidding war could be costly for Novo Nordisk.
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The stock price for Danish drugmaker Novo Nordisk (NYSE: NVO) is down more than 8% since last Friday's close. What's going on with this former darling of the global pharmaceutical industry that surged in recent years to become Europe's most valuable company?
Well, several things, in fact.
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On Wednesday (Nov. 5), the maker of popular GLP-1 drugs Ozempic and Wegovy announced third-quarter results, and they did not impress.
Earnings of 4.5 Danish krone (DKK) a share on revenue of 75 billion DKK missed expectations of 4.99 DKK a share on sales of 76.5 billion DKK.
Worse, the company lowered its outlook for the full year (2025). Sales and operating profit growth is now expected to be 4 and 6 percentage points lower, respectively. The company said that the narrowing of the guidance ranges reflects lowered growth expectations for Novo Nordisk's GLP-1 treatments within diabetes and obesity.
Tough competition
The recent bad news for Novo Nordisk actually began last week. That's when competitor Eli Lilly (NYSE: LLY) announced its own third-quarter results and revealed that its GLP-1 drug tirzepatide, which it sells as Mounjaro for treating type 2 diabetes and Zepbound for weight loss, is now the world's best-selling drug. Lilly also announced a partnership with retail giant Walmart that will allow patients to pick up online orders at the retailer's Supercenters.
Image source: Getty Images.
And Novo Nordisk also entered a dangerous bidding war with competitor Pfizer (NYSE: PFE) last week for an innovative biotech firm called Metsera, which is developing new obesity treatments.
On the brighter side, both Novo and Lilly may gain access to more U.S. patients in coming months after the firms on Thursday struck a deal with the Trump administration to significantly cut prices for their anti-obesity drugs for Medicare and Medicaid patients in exchange for a three-year grace period from tariffs.
The market for anti-obesity drugs is a gold mine -- expected to top $100 billion within five years. But the competition to tap it is also fierce, as Novo Nordisk is now learning the hard way.
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Matthew Benjamin has positions in Novo Nordisk. The Motley Fool has positions in and recommends Pfizer and Walmart. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
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