Novo Nordisk's Paediatric Win Lands in a Market Fixated on Semaglutide's Looming Patent Cliff

Novo Nordisk's STEP Young trial met its goal in children, but shares fell 7.6% for the week after Morgan Stanley cut the stock to Underweight.

Novo Nordisk has delivered a clinical victory that should, on paper, be cause for celebration. The Danish drugmaker confirmed that its Phase 3 STEP Young trial met its primary endpoint in children aged 6 to under 12 living with obesity: 40.4% of participants receiving weekly semaglutide alongside lifestyle intervention brought their BMI below the obesity threshold. The safety profile tracked with earlier adult and adolescent data, and the company reported no new safety signals, including on growth and pubertal development.

Investors, however, barely blinked.

A Stock Under Relentless Pressure

The shares closed Friday at EUR 37.05, down 2.6% on the day. Over the week, the equity shed 7.6%, and year-to-date losses now stand at 16%. Measured against the 52-week high of EUR 54.86 reached in late January, the stock has given up 32%.

The trigger for the latest leg down was Morgan Stanley's decision on Thursday to cut its rating from Equal-weight to Underweight and slash its price target to DKK 250. The bank's case rests on a subdued medium-term growth outlook and the risk posed by the eventual loss of exclusivity on semaglutide — the molecule behind blockbusters Ozempic and Wegovy — expected to bite in the early-to-mid 2030s. Copenhagen-listed shares fell 2.6% the same day.

Morgan Stanley's modelling lays bare the concentration problem. Semaglutide accounted for roughly 75% of group revenue in 2026, and even by 2031, when patent protection begins to erode, the bank projects the drug will still generate 59% of sales. That, in the analysts' view, is a lump of risk the company has not adequately hedged.

The oral obesity franchise built around the Wegovy pill is forecast by Morgan Stanley to reach USD 10 billion in revenue by 2031. Impressive as that sounds, it falls short of offsetting pricing pressure and intensifying competition, according to the bank. A survey of 200 US primary care physicians, combined with prescription data, points to share losses in both diabetes and obesity: after a robust first half of 2026, growth in the Wegovy tablet has decelerated. Rival Eli Lilly has captured the bulk of Medicare patients for Zepbound since launching its Bridge programme.

A Dissenting Voice — and a Buyback That Keeps Running

Not every house shares the bearish read. HSBC lifted its target to DKK 320 from DKK 300 — a move dated 9 September in one account and Wednesday in another — underscoring just how divided the analyst community has become on the long-term pipeline. Where Morgan Stanley sees an unfavourable risk-reward balance, HSBC continues to see moderate upside.

Meanwhile, Novo Nordisk's repurchase programme rolls on in the background. As of 4 September, the company had bought back approximately 32 million B-shares since 4 February at an average price of DKK 281.63, a transaction volume of around DKK 9 billion. That sits within a twelve-month programme worth up to DKK 15 billion. The buyback has yet to visibly support the share price, but it signals that management retains confidence in the company's intrinsic value despite the downgrade.

The week's clinical news has been mixed. Results from the discontinued Ziltivekimab studies last Wednesday added to the weight on sentiment, even if the analyst action dominated the headlines. Since the Phase 3 HERMES and ATHENA investigations were halted, the stock has lost 3.4%. The German launch of the Wegovy tablet just over a week ago provided no counterweight — a decline of 7.6% has accumulated since.

London Beckons

All eyes now turn to the Capital Markets Day on 21 September in London, where management will lay out strategy, the research pipeline, and operational priorities. Ahead of that, an internal staff meeting is scheduled for 15 September, at which the company's "next chapter" is expected to be discussed, according to media reports.

The stakes are clear. Novo Nordisk's guidance for full-year 2026 points to growth in adjusted revenue and adjusted operating profit of between 0% and minus 6% at constant exchange rates — a range that leaves little room for a positive surprise. Investors will be listening closely for concrete answers to the patent-cliff concerns; anything less risks deepening the scepticism Morgan Stanley has articulated.

Technically, the picture remains bruised. With an RSI of 34.1, the stock is edging toward oversold territory, and it trades roughly 10% below its 50-day moving average. Whether the coming weeks mark a turning point will become clearer only after London — though the paediatric data at least give management some clinical tailwind to work with.