Novo Nordisk Faces Mounting Pressure as Generic Rival Emerges

The Danish pharmaceutical giant's commanding position in the weight-loss drug market is under significant threat. Novo Nordisk, already contending with a disappointing annual forecast, now faces direct competition for its blockbuster drug Wegovy. As the initial hype subsides, a fierce battle over pricing appears imminent.

The company's challenges were underscored in early February when it issued a sobering outlook for the current fiscal year, unsettling investors. Key concerns from the guidance include:

• Declining Revenue: On a currency-adjusted basis, sales are projected to fall between 5% and 13%.
• Intensifying Competition: Management identified aggressive competition and price concessions in the critical U.S. market as primary drivers of the pressure.
• Margin Erosion: The anticipated arrival of lower-cost generic alternatives in international markets presents a further risk to profitability.

This gloomy financial backdrop sets the stage for the latest competitive development.

Indian Pharma Giant Launches Generic Challenge

In a move that signals a new era for the GLP-1 drug market, India's Dr. Reddy's Laboratories has announced plans to introduce a generic version of the popular weight-loss injection Wegovy. The timing is strategic: the patent for the active ingredient semaglutid is set to expire in India in March 2026. This will strip Novo Nordisk of its exclusive protection in one of the world's most populous markets.

Should investors sell immediately? Or is it worth buying Novo Nordisk?

Senior executives at Dr. Reddy's have indicated their generic product could be priced significantly lower than the branded original. This follows recent regulatory approval in India for a generic version of Ozempic, Novo Nordisk's diabetes medication. Consequently, both pillars of the company's lucrative GLP-1 franchise are now exposed to direct competitive pressure from more affordable alternatives.

Share Buyback Provides Temporary Support

In response to these mounting pressures, Novo Nordisk's management has turned to financial engineering to support its share price. A share repurchase program worth up to 15 billion Danish kroner was initiated on February 4th. By February 13th, the company had already bought back 1.75 million of its B-shares. Currently, the firm holds approximately 0.4% of its share capital as treasury stock. While these measures aim to provide price stability, they do not address the core fundamental issue: the erosion of the company's unique market position.

The impending launch of generic semaglutid in India marks a pivotal shift for Novo Nordisk. With patent protection winding down, the market's focus is decisively moving from product availability to price competitiveness, heralding a more challenging commercial landscape.