Weight-Loss Wonder Drug Luster Fades? Novo Nordisk Plunges 30% in Worst Week

TradingKey - Global obesity treatment leader Novo Nordisk(NVO) is experiencing what may be the most severe week of stock decline in its history, with shares plummeting over 30% this week and wiping out more than $80 billion in market value. The Danish pharmaceutical giant has fallen out of Europe's top 10 listed companies by market capitalization.

(Source: TradingKey)

Founded in 1923, this Danish pharmaceutical titan once topped Europe's market cap rankings in 2023 with annual revenue exceeding Denmark's GDP, riding the "miracle weight-loss drug" phenomenon created by its diabetes treatment semaglutide.

The stock avalanche began on Tuesday when Novo Nordisk shares plunged 21.83% in a single day, primarily due to the company significantly lowering its full-year financial guidance and announcing the appointment of an internal executive as new CEO.

Then on Thursday, former U.S. President Trump sent letters to 17 global pharmaceutical giants, including Novo Nordisk, Eli Lilly, and Pfizer, demanding they reduce U.S. drug prices to "the lowest global levels." This sudden shift in policy direction triggered a broad sell-off in global pharmaceutical stocks, sending Novo Nordisk shares down another 4% to a four-year low.

Novo Nordisk cited persistent challenges from generic drugs, attributing its lowered performance outlook in Tuesday's statement to market share erosion from generics and intensified overall competition.

As early as 2022, the U.S. FDA temporarily permitted pharmacies to produce generic versions of semaglutide—the company's star product—due to supply shortages. Although this authorization was later revoked, low-cost generics had already entered the market, severely squeezing Novo Nordisk's market share. Data indicates the company lost 14 percentage points of market share as a result.

The company stated that some pharmacies continue selling these generics under the guise of "personalized medications," and such practices are difficult to prevent through legal proceedings completely.

Barclays has downgraded Novo Nordisk's stock rating from "Overweight" to "Equal Weight," pessimistically noting, We struggle to see what could attract investors back. Even the recent CEO change is unlikely to resolve the multiple challenges facing the company in the short term.