Novo Nordisk, like its US rival Eli Lilly, has been pushed to lower prices in its biggest market under pressure from US President Donald Trump. The drugmaker last month launched an oral version of Wegovy at a lower price than the injection, to attract patients who pay for their treatments out of pocket. The stock fell over 17% on Wednesday after the group warned that its sales and profits could drop by up to 13% this year.
Price cuts under political and competitive pressure
Chief executive Mike Doustdar, who took the helm last year after Novo lost its leading position to Lilly, says he is prepared to accept short-term pain to boost volumes. He says the price cuts will ultimately pay off over the long term. But several investors fear Novo could end up losing a race to the bottom against Lilly, which published markedly more upbeat guidance the same day.
"The real danger lies in a potential price war between two groups fighting for market share, which would be a no-winner situation," said Markus Manns, a portfolio manager at Union Investment, a shareholder in both Novo and Lilly. "There is no guarantee these price cuts will eventually pay off."
Novo Nordisk bets on volumes despite concerns
After the launches of Wegovy in 2021 and Lilly's rival product Zepbound in 2023, the injections sold for about $1,000 a month at pharmacies. Under political pressure in the US, and with a growing number of patients paying directly, these drugs are now offered on drugmakers' websites at prices ranging from $149 to $299.
Novo, which is highlighting prescription levels above expectations for its recently launched Wegovy pill as a complement to the injection, is trying to reassure investors worried about the impact of price cuts on its revenue and margins. Its message is clear: be prepared to wait.
"We are very optimistic about the future, but we have to acknowledge that in the short term, price reductions weigh on our financial performance," Mike Doustdar said, adding that the strategy will help Wegovy regain ground against Zepbound.
According to IQVIA data cited by analysts, weekly prescriptions for injectable Zepbound reached 469,000 in late January, compared with about 257,000 for all Wegovy prescriptions, injectable and oral combined, a figure that does not cover all sales of the oral version.
Zepbound retains a clinical edge with greater weight loss than the Wegovy injection, while Novo's pill showed in trials higher efficacy than Lilly's oral version, which is expected to be approved in April.
Some investors, who had initially welcomed Mike Doustdar's willingness to act quickly in response to challenges in the US market, are now questioning the scale of the sacrifices being made. "Novo had already indicated that the volume strategy would take time to materialise," said Lukas Leu, a manager at ATG Healthcare, a Novo shareholder.
"We are seeing a volume response to the price cuts, but ultimately it is the price reductions that will drive the decline in U.S. sales this year," chief financial officer Karsten Munk Knudsen acknowledged.
A crowded GLP-1 market, and a duopoly under threat
The market for GLP-1 treatments is also becoming increasingly crowded. Until now, Novo and Lilly had been valued as if the obesity market would remain a duopoly, with strong ability to hold prices and expand margins. But the rise of direct-to-consumer sales channels is making pricing more sensitive.
"On GLP-1, I think the market is going to become very saturated," said GSK chief executive Luke Miels, adding that his group preferred to focus on diseases associated with obesity, such as liver conditions.
Competition is also intensifying with the rise of compounded versions mimicking GLP-1 drugs, which Novo estimates are used by up to 1.5 million Americans, as well as with the expected arrival of other major drugmakers such as Pfizer and Amgen, which could launch their own products from 2028.
For some analysts, Novo's pricing strategy is risky given its lag behind Lilly. "Cutting prices can make sense when you are the market leader and growing," said Courtney Breen, an analyst at Bernstein. "It becomes much more questionable when you are losing market share and already facing an annual decline in sales."
Mike Doustdar nevertheless remains convinced that the price cuts will translate into a meaningful increase in volumes by the end of the year. "If you work in manufacturing and the supply chain, you will be producing a lot more boxes than in 2025," he said. "That is growth."
