Novo Nordisk Faces Mounting Pressure as Competition Intensifies

Novo Nordisk DK0062498333

The Danish pharmaceutical giant Novo Nordisk, long the undisputed leader in the weight-loss drug market, is confronting a period of significant transition. A stark warning from TD Cowen analyst Michael Nedelcovych highlights the potential for declining revenue and earnings starting in 2026, driven primarily by aggressive competition from Eli Lilly. While company leadership points to new products and a substantial war chest for acquisitions, investors are left to ponder whether the firm can maintain its dominant market position.

In response to these competitive headwinds, Novo Nordisk’s management is not relying solely on organic growth. CEO Mike Doustdar has signaled a strong appetite for mergers and acquisitions to bolster its obesity treatment portfolio. The company is prepared to allocate between 10 and 40 billion US dollars for this purpose. This aggressive stance is a direct reaction to competitive pressure from Eli Lilly and follows the loss of a bidding war for Metsera to Pfizer in November of last year.

Concurrently, a previously announced restructuring program is underway, set to eliminate 9,000 positions globally by September 2025. This move aims to streamline operations and improve overall efficiency as the market landscape evolves.

Analyst Downgrade Signals Caution

The recent dampened outlook stems in part from a revised analysis by TD Cowen’s Michael Nedelcovych. He has drastically reduced his price target for Novo Nordisk shares from 105 to 70 US dollars, suggesting the era of unimpeded growth may be temporarily over.

His adjusted financial models paint a cautious picture for 2026:
* Revenue: Projections now stand at 290 billion Danish kroner, representing a 5% reduction from his prior estimate.
* Earnings Per Share (EPS): The forecast has been cut to 19.30 DKK, a significant 14% decrease from the previous outlook.
* Market Consensus: Both of these revised figures now fall below the broader analyst consensus.

Nedelcovych further cautions that the company’s price-to-earnings (P/E) ratio could face downward pressure, as investors are already beginning to factor in the patent expiration for its key drug, semaglutide, in 2032. Market sentiment reflects this skepticism: the stock has declined approximately 34% over a 12-month period and currently trades at 51.30 euros.

Countering Competition with a New Pill

A central challenge was openly addressed by CEO Doustdar at the recent J.P. Morgan Healthcare Conference: an estimated 1.5 million Americans are currently using "compounded drugs"—unlicensed, cheaper copycat versions of branded weight-loss medications. These alternatives often cost only around 199 US dollars per month, a fraction of the price for Novo’s branded Wegovy.

To combat this trend, Novo Nordisk has launched a daily oral version of Wegovy priced at 149 US dollars. Early data is promising: according to IQVIA, over 3,000 prescriptions were filled in the first four days following its launch on January 5. Analysts at Berenberg believe the pill could generate one billion US dollars in revenue this year, provided the company capitalizes on its first-mover advantage in the oral GLP-1 space.

The Pivotal Year Ahead

The direction of Novo Nordisk’s trajectory will likely be determined by developments in 2026. Investors are advised to closely monitor the sales performance of the new Wegovy tablet and the upcoming Phase III clinical trial data for CagriSema, another promising drug candidate. Positive results from these key catalysts will be essential to counter the prevailing analyst skepticism and reaffirm the company’s growth narrative.