Novo Nordisk's Pipeline Setbacks Take the Shine Off a Run of Regulatory and Clinical Wins

Morgan Stanley cut Novo Nordisk to Underweight, citing weak medium-term growth and the semaglutide patent expiry; shares fell 2.4%.

Morgan Stanley cut its rating on Novo Nordisk to Underweight from Neutral on Friday, citing lacklustre medium-term growth prospects and the looming patent expiry on semaglutide in the early 2030s. The downgrade landed squarely in the middle of what had otherwise been a productive stretch for the Danish drugmaker, and investors wasted little time reacting: the shares fell 2.4% on the day of the call.

The timing is awkward for the Copenhagen-based group, which has spent recent weeks rolling out fresh clinical and regulatory milestones across its semaglutide franchise. On 1 September, Novo Nordisk launched the Wegovy pill in Germany, widening access to oral obesity therapy in Europe. A company spokesperson confirmed the rollout to Reuters, noting the tablet form is aimed at patients who are reluctant to use injections and is intended to blunt competition from rival oral products.

Days earlier, semaglutide cleared its primary endpoint in a late-stage trial involving children aged 6 to under 12 living with obesity. In the Phase 3 STEP Young study, 40.4% of treated children were no longer classified as obese after 68 weeks, assuming full adherence to therapy. The combination of semaglutide and lifestyle changes thus hit the trial's main goal, extending the blockbuster molecule's reach into an age group that has so far been largely untapped.

Cardiology Programme Loses Two More Trials

Those gains have been partly overshadowed by trouble in Novo Nordisk's cardiovascular pipeline. Last Monday, the company halted two further Phase 3 studies of ziltivekimab in heart failure — HERMES and ATHENA — after an independent data monitoring committee judged their odds of success to be slim relative to an earlier trial that had already failed. One remaining cardiovascular study in the programme continues, with results expected in the first half of 2027. Since the setback, the stock has shed 3.4%, a blow to a development effort meant to open growth avenues beyond the core diabetes and obesity business.

The news sharpens doubts about whether Novo Nordisk can diversify its portfolio sufficiently outside GLP-1 therapies — precisely the concern Morgan Stanley flagged in its downgrade.

Offsetting that, at least in part, is a strategically significant green light from China. Wegovy has been approved there for the treatment of MASH, an advanced form of fatty liver disease, making it the first drug in its GLP-1 class to win authorisation for that indication in the country. Novo Nordisk framed the decision as an expansion of Wegovy's evidence base, stretching from weight management and cardiovascular health into liver function. China is viewed as a major growth engine for obesity and metabolic medicines, so the regulatory step matters for the group's longer-term positioning.

Buyback Keeps Running Ahead of Capital Markets Day

Alongside the clinical and regulatory developments, Novo Nordisk is pressing on with its share repurchase programme. Since the initiative began on 4 February, the company has been buying back B shares under a twelve-month plan worth up to DKK 15 billion. Such programmes signal management's confidence in the company's long-term value, though they can do little to offset analyst scepticism in the near term.

The share price tells the story of that unease. Friday's close came in at EUR 37.05, down 2.6% on the previous session. Over the week, the stock has lost 7.6%, and year-to-date the decline stands at 16%. The paper now trades roughly 32% below its 52-week high of EUR 54.86 set on 23 January, while sitting 22% above its 52-week low from early March.

Technically, the picture remains weak: with an RSI of 34.1, the shares are approaching oversold territory and trade below both their 50-day and 200-day moving averages.

Investors now have a fixed date to circle. Novo Nordisk holds a Capital Markets Day on 21 September, where attention will focus on how management frames its medium-term growth strategy beyond the semaglutide patent cliff — and whether it can mount a convincing answer to Morgan Stanley's bearish stance.