How did Novo Nordisk lose the US market?

With several years' head start in a market poised for exponential growth, Novo Nordisk seemed to have everything going for it. However, in just one year, the stock has lost more than 50% of its value. Against this backdrop, the company underwent a major strategic review, marked by the departure of its CEO and part of its management team. Let's take a look back at the internal mistakes that have cost the Danish champion dearly.

Since Wegovy was launched in the US in mid-2021, Novo Nordisk has generated $46bn in net profit. However, by 2024, Eli Lilly has established itself as the new leader in prescriptions in the US market, which has nearly 100 million potential patients.

How did the pioneer manage to be overtaken so quickly? A Reuters investigation, based on testimony from former Novo employees, sheds light on the flaws of a poorly calibrated strategy.

Part 1 - A failed launch

The marketing and sales teams predicted massive success for Wegovy. But the launch, decided by Doug Langa (head of the US market), was rushed. The result: insufficient supply to pharmacies and limited health insurance coverage for a treatment costing $1,300 per month.

Many patients, frustrated at not being able to find their dose or unable to afford it, turned to poor copies from compounding pharmacies. Novo's first mistake: misunderstanding its market.

Part 2 - Underestimated demand

Wegovy had proven its effectiveness (average weight loss of 16%). Yet, at a conference in 2019, Novo simply predicted that its obesity-related revenues would double by 2025.

The reality far exceeded expectations: sales rose from $5.7bn to $65.1bn in 2024. But Novo remained locked into its initial plans, ignoring the signs on the ground. Its export strategy, copied from that of the United States, also capped volumes. By being too cautious, the group missed an opportunity to cement its dominance.

Part 3 - A poorly thought-out pricing policy

Another misstep by the former European market leader was pricing. While its two competitors were selling their respective diabetes drugs for around $1,000, Novo marketed Wegovy, which was based on the same molecule, for $1,300.

The group refused to grant substantial discounts to PBMs (pharmaceutical benefit managers), who negotiate on behalf of insurers and employers. This lack of pricing flexibility penalized its access to the market.

Eli Lilly, an opportunistic and agile competitor

In 2024, Eli Lilly launched Zepbound, its obesity drug.

The American company entered a frustrated market. It was able to take advantage of a market that had not yet been won over by Novo Nordisk, despite the latter's more than two-year head start.

The group entered the market with a solid supply chain, enabling it to sell quickly to direct-to-consumer pharmacies and promote the product to consumers via its LillyDirect platform.

Above all, Eli Lilly is slashing prices. The treatment is being offered at the same price as Mounjaro, with discounts of up to $349 for uninsured patients.

Novo is waiting until March 2025 to launch its own online pharmacy and reduce its price to $500 for uninsured or underinsured patients.

A telling quote from a BMO Capital Markets analyst sums up the strategic gap between the two groups: "Whenever someone at Eli Lilly came up with a creative or bold idea, Jorgensen (former CEO of Novo) would respond, 'I don't know if we can do that.'"

A useful reminder of how this drug is taken: It is injected once a week in doses of 2.5 to 15 mg. The dosage is gradually increased.

It is difficult to establish a set price for each dose, as the two players are engaged in fierce marketing battles in this market.