Novo Nordisk Faces Tough Questions After a Rocky Quarter

Novo Nordisk had a challenging fourth quarter, with its stock dropping nearly 30% due to underwhelming clinical trial results, concerns about its experimental obesity pill, and slower-than-expected scaling of its Ozempic and Wegovy drug production. To restore investor confidence, the pharmaceutical giant must address several pressing issues, as outlined by analysts from Bank of America.

1. Can the EPS Growth Streak Continue?
Novo’s stock performance has closely followed its earnings-per-share (EPS) upgrade cycle. In 2024, the company raised its full-year sales guidance every quarter. Looking ahead to 2025, analysts predict Novo will guide for sales growth slightly above the 20% consensus, which could help offset the negative impact of its $11 billion acquisition of Catalent, a contract manufacturer. Investors will be watching closely when Novo reports earnings on February 5.

2. What’s Next for CagriSema?
Novo’s much-anticipated weight-loss drug, CagriSema, combines ingredients from its blockbuster drugs Ozempic and Wegovy with another compound, cagrilintide. While initial trials hinted at promising weight-loss results of 25%, recent data showed only 20% weight loss—on par with Eli Lilly’s rival drug, Zepbound. This outcome disappointed investors, as it doesn’t provide a clear competitive edge.

Novo has committed to further studies to improve dosage, with results expected in the first half of 2025. Whether this will restore confidence remains to be seen.

3. Can Novo Compete with Eli Lilly’s Orfoglipron?
One of Novo’s most significant challenges lies in its competition with Eli Lilly’s oral obesity drug, Orfoglipron, which has late-stage trial data expected by mid-2025. Novo’s own oral weight-loss drugs, Monlunabant and Amycretin, are still in earlier stages of development, leaving investors anxious about the company’s ability to keep up.

Progress on Novo’s oral medications will be a key focus for analysts and shareholders alike.

4. Will Amycretin Deliver?
With CagriSema underperforming, Novo’s once-daily oral drug Amycretin is gaining attention. Strong data from early trials in 2025 could support a move into late-stage testing by year-end, with Phase 2 results expected by 2026. However, competition in the obesity market is heating up, and analysts worry that Novo’s timeline—stretching into 2027 or later—may put it at a disadvantage.

5. Can Novo Manage Ozempic Price Cuts?
Price cuts may soon loom over Novo’s Ozempic, Wegovy, and Rybelsus drugs. The Centers for Medicare and Medicaid Services (CMS) is expected to release its next negotiated drug pricing list on February 1, potentially impacting Novo’s revenue. These drugs make up a significant portion of the company’s earnings, but analysts say investors are less worried now, given that earlier CMS price adjustments in 2023 had a milder-than-expected impact.

However, with Donald Trump’s return to the White House this month, there are fears that his administration could pursue stricter pricing policies. During his first term, Trump made reducing prescription drug costs a priority.

What’s Next for Novo Nordisk?
Novo Nordisk has a lot riding on its upcoming earnings report and further clinical trial data. Investors are counting on the company to clarify its plans for growth and address rising competition. With heavyweights like Eli Lilly in the mix, Novo will need strategic moves to maintain its edge in the rapidly evolving obesity drug market.