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As a pioneer in diabetes care, Novo Nordisk NOVO B claims 34% of the USD 80 billion-plus diabetes treatment market and roughly half of the insulin market, itself worth more than USD 15 billion. Until 24 March, Novo Nordisk also claimed the throne as Europe’s largest publicly traded company, but has now been overtaken by the German software giant SAP.
“Despite being one of only two biopharma firms providing popular GLP-1 therapies for patients with diabetes and obesity, Novo shares have been tanking since December”, says Morningstar Director of Equity and Credit Research Karen Andersen.
Key Morningstar Metrics for Novo Nordisk
Why Has Novo Nordisk Stock Declined so Much?
The share price crash comes on the back of a long and impressive rally for Novo Nordisk. During the three years leading up to its peak valuation in June 2024, the stock rallied 300% while its market capitalization overtook even the size of the Danish economy at one time. As of market close on 8 April, the Danish firm’s share price had however fallen to DKK 434.04, its lowest level since November 2022 and a 58% decline from its all-time high in June 2024. March marked the stock’s worst monthly performance since July 2002 with a 27% decline.
Andersen says that the biggest initial hit was from disappointing phase 3 data for Novo Nordisk’s most important late-stage pipeline candidate, CagriSema. “This was meant to leapfrog Lilly’s Zepbound and offer patients even steeper weight loss and perhaps fewer tolerability issues.”
“While we are still waiting for head to head data (probably in early 2026) between the two drugs, data from this study in December and another CagriSema study last month point to efficacy that is probably more similar to Zepbound,” she adds.
By the time CagriSema launches in 2027, Andersen says that Zepbound could be so entrenched that a new product with similar efficacy could struggle to gain share. Beyond this, US policy risks are escalating.
“First we have the Medicare negotiation for their key drug semaglutide, Wegovy/Ozempic/Rybelsus, in 2027 – it’s not clear how far the Trump administration and new head of CMS Mehmet Oz will take this negotiation, it could mean significant pressure on pricing.
“Second, tariff concerns have really been weighing not just on Novo but on most of big pharma. Most companies, including Novo, do some manufacturing in Europe, making them vulnerable to tariffs on imports to the US.”
President Donald Trump announced 20% tariffs on European goods and services on Wednesday, but as Novo already has significant manufacturing presence in the US that is on track to grow substantially in 2026 as more capacity from the recent Catalent acquisition becomes available, Andersen thinks this should help protect it from a significant hit.
Novo Nordisk Valuation
Closing around DKK 434 on April 8, Andersen sees Novo’s stock as undervalued at a 32% discount compared to her estimated fair value of DKK 640.
“The market is not accounting for the long-term demand for Novo’s cardiometabolic products in diabetes, obesity, and other new indications”, she says, adding that even if CagriSema is a commercial failure, the firm’s amycretin program (that could enter phase 3 this year) looks very promising, and Novo is in-licensing multiple other types of drugs that could be complementary with its internal pipeline.
“Novo is a firm that has an excellent track record of remaining focused on a solid long-term strategy, and this looks like an opportunity right now, given Novo’s wide moat and innovative foundation.”
The following are highlights of Andersen’s current outlook for Novo Nordisk and its stock. The full report and more of her coverage are available here.
Economic Moat
Novo Nordisk’s strong intangible assets in diabetes and related cardiometabolic diseases like obesity give the firm a wide economic moat that will shield profitability for the long run. A focused research and development strategy allows the firm to repeatedly extend patent protection through innovation. Efficient manufacturing techniques and economies of scale have allowed Novo’s insulin business to provide strong global profitability, qualities that it shares with the only two other global insulin players, Sanofi and Eli Lilly.
Fair Value and Profit Drivers
We raised our fair value estimate for Novo Nordisk to DKK 640 per share from DKK 600 following a solid management outlook for 2025 that likely reflects stronger growth in GLP-1 supply than we had previously assumed.
We expect Novo to gain USD 75 billion of a more than USD 200 billion global GLP-1 market in diabetes and obesity by 2031, ahead of semaglutide’s 2032 patent expiration, with Lilly standing as the firm’s key competitor. GLP-1 growth drives our overall five-year forecast for 14% top-line and 16% bottom-line growth through 2029.
Risk and Uncertainty
We assign Novo Nordisk a High Uncertainty Rating due to price pressure and growing reliance on the high-growth GLP-1 class that add volatility to potential cash flows. Novo Nordisk sees roughly 57% of its sales from the US pharmaceutical market, giving it significant exposure to US policy changes. Novo’s portfolio has high exposure to Medicare, and the firm faced pressure due to US legislation that increased the portion of the Medicare Part D donut hole covered by manufacturers in 2019 (from 50% to 70%) and increased the size of the donut hole in 2020. Following the passage of the Inflation Reduction Act, we include a 3% step down in US sales from Medicare inflation caps, and we assume Medicare negotiation for Ozempic and Rybelsus beginning in 2027, well ahead of their 2032 patent expirations.
Novo Bulls Say
Novo’s obesity therapy Wegovy is significantly expanding the obesity treatment market given its strong efficacy and is poised to remain a key drug in the market until patent expiration in 2032.
With a solid portfolio of GLP-1 products, including injectable Ozempic and oral Rybelsus, Novo is well positioned to defend its formidable diabetes market share.
Semaglutide is also being studied in areas including liver disease (NASH) and Alzheimer’s, and Novo could achieve a strong share in these nascent markets.
Novo Bears Say
Tresiba’s strong profile in the long-acting insulin market hasn’t been enough to defend it from US pricing pressure due to competition from Sanofi and Lilly, and biosimilar insulins have weighed on category pricing since 2017.
Novo’s Victoza and Ozempic have made GLP-1 a key part of the firm’s diabetes growth, but oral GLP-1 Rybelsus has had slower uptake, and Lilly’s newly approved Mounjaro provides strong competition
Novo’s obesity drug Wegovy had a slow launch due to supply constraints, and Zepbound, which is Lilly’s obesity drug, has a superior profile.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
