Novo Nordisk Shares Face Steep Decline Amid Market Pressures

Investors in Novo Nordisk are likely to remember 2025 as a painful chapter. The Danish pharmaceutical giant, once the undisputed leader in the weight-loss drug sector, has seen nearly half of its market capitalization evaporate. This dramatic shift forces the company to confront a new competitive reality. As rivals capture market share aggressively and internal restructuring unfolds, a critical question emerges: Will the new management's decisive actions be enough to halt the downward spiral?

The scale of the decline is starkly visible in key metrics. The stock has lost approximately 59% over a 12-month period, trading significantly below its 200-day moving average. From a fundamental perspective, the shares now change hands at roughly 14 times expected earnings. This valuation represents just half of the company's five-year average, highlighting a profound repricing.

This discounted level has divided market experts. Analysts at Morgan Stanley maintain a cautious stance, citing ongoing risks and subsequently lowering their price target. In contrast, Berenberg Bank argues the sell-off has been overdone and continues to recommend buying the equity.

Structural Challenges Mount

The nearly 50% drop in share price since the start of the year stems not from temporary setbacks but from deeper structural issues. Novo Nordisk feels the competitive heat from Eli Lilly more intensely than ever. Lilly's rival products, Mounjaro and Zepbound, have already generated billions in revenue within the first nine months of the year, directly challenging Novo's market leadership.

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

The situation is exacerbated by two guidance downgrades issued during the current year. Furthermore, increasing pressure from lower-cost compounded semaglutide alternatives is taking a toll. Although a draft bill in the U.S. House of Representatives could potentially restrict this practice, the damage to Novo Nordisk's market position is already apparent.

Pipeline and Cost Cuts Offer a Path Forward

Under the leadership of CEO Mike Doustdar, who took the helm in August, the firm is implementing a counter-strategy. A cost-saving initiative, which includes cutting 9,000 positions, is projected to deliver annual savings of around 8 billion Danish kroner by 2026.

Simultaneously, hopes are pinned on the company's research pipeline. The U.S. Food and Drug Administration is currently reviewing an oral version of semaglutide and a higher-dose Wegovy injection. Additionally, the combination drug CagriSema, for which approval will be sought in 2026, is viewed as a potential catalyst for a recovery.

The path to stabilization now hinges decisively on execution. The successful commercial launch of new products and demonstrable proof that the workforce reductions are stabilizing margins will be critical for 2026. However, as long as market share remains under sustained pressure, the burden of proof lies squarely with the Danish company.