Novo Nordisk’s Strategic Pivot: Balancing Patent Wins with Pricing Pressures

Novo Nordisk DK0062498333

The new year has opened with a significant legal victory for Novo Nordisk in a crucial growth market. China's Supreme People's Court upheld the core patent for semaglutide, providing a solid foundation for the company's strategy. This move coincides with a more aggressive commercial approach, marked by substantial price reductions in China and the imminent U.S. launch of an oral weight-loss drug. These actions aim to capture higher sales volumes, though they introduce pressure on profitability.

A key development for the first quarter is unfolding in the United States. Following regulatory approval from the FDA on December 22, Novo Nordisk is set to introduce a Wegovy tablet (oral semaglutid 25 mg) to the market this January. This product represents the first orally available GLP‑1 receptor agonist explicitly approved for weight control, targeting patient groups who are averse to injectable therapies. A successful rollout is viewed as a major potential catalyst for the stock in early 2026, as it diversifies the product portfolio beyond injectable solutions.

Chinese Market: A Dual Narrative of Protection and Price War

The company's position in China presents a contrasting picture of legal security and intensifying commercial competition.

Patent Security Upheld: In a decisive year-end ruling, the Supreme People's Court confirmed the validity of the semaglutide compound patent on December 31. This judgment prevents generic competitors from entering the market prematurely, safeguarding the market position of Ozempic and Wegovy. It ensures Novo Nordisk maintains exclusivity for the active ingredient in the region for the patent's remaining term, allowing it to meet the robust demand for GLP‑1 therapies without immediate generic pressure.

Aggressive Pricing Strategy: Despite this legal protection, the company is actively stimulating competition through pricing. On December 29, Novo Nordisk slashed the list prices for its obesity drug Wegovy by approximately half in key Chinese provinces.

The specifics of this strategic price cut include:
* Magnitude: Reductions of up to 50% for high-dose Wegovy.
* Geography: Adjustments were made in procurement documents for regions including Yunnan and Sichuan.
* Strategic Aim: The move is designed to solidify market share ahead of a further push from Eli Lilly's Zepbound and to prepare for potential volume-based procurement systems.

This strategy underscores a market where the legal framework is settled, but the battle for market share is accelerating. Recent stock volatility reflects investor concern that declining unit prices will erode margins, even as higher sales volumes are anticipated.

Market Performance and Forward-Looking Assessment

Novo Nordisk's B-share is currently trading around 325.30 DKK on the Copenhagen exchange. The stock faced downward pressure toward the end of the previous year, primarily driven by the announced price cuts in China. However, the subsequent positive patent ruling is considered a crucial supportive factor for its valuation.

The investment thesis now hinges on a clear balance of forces:
* Catalysts: Confirmed patent exclusivity in China and the U.S. launch of oral Wegovy.
* Headwinds: Sharply falling prices in Asia, creating corresponding margin pressure.

The critical question for investors is whether increased volume—driven especially by the new oral product and deeper penetration of the Chinese market—can offset the impact of lower prices. A preliminary, substantive answer will come with the Q4 2025 earnings report, which will reveal how revenue mix and profitability are evolving under these new conditions.