Imagine the shockwaves rippling through the pharmaceutical world as Novo Nordisk, the powerhouse behind the beloved weight-loss drugs Wegovy and Ozempic, anticipates a significant decline in its revenue for 2026. This downturn is largely attributed to former President Donald Trump's initiative aimed at slashing prices for weight-loss medications in the United States, coupled with increasing competition and the impending expiration of crucial patent protections.
Once celebrated as a leader in the burgeoning market for weight-loss solutions, Denmark’s Novo has now expressed concerns that its sales could dip between 5% and 13% this year. This comes despite the recent introduction of the Wegovy pill in the U.S., which aims to offer an alternative option to the existing injection form. The company’s stock took a nosedive, plunging 18% on Wednesday morning alone, wiping out all gains accrued throughout the year. Over the past twelve months, Novo's shares have lost nearly half of their value, a staggering shift for an entity that once seemed unstoppable.
In the previous year, Novo managed to grow its sales by 10%, reaching 309 billion Danish kroner (approximately £36.6 billion), even amidst challenging circumstances, as noted by CEO Mike Doustdar. He reported a modest profit increase of 3%, totaling 130.5 billion kroner. However, Doustdar acknowledged the tough reality ahead, indicating that the company would likely encounter 'pricing headwinds' as the market becomes increasingly competitive.
A significant factor contributing to this forecast is Novo’s agreement with the Trump administration to drastically reduce prices from over $1,000 per month to an average of about $350. Furthermore, the patent for semaglutide—the active ingredient in its obesity and diabetes treatments—will soon expire in several countries, including India, allowing generic manufacturers to produce lower-cost alternatives, which could further threaten Novo's market share.
On a brighter note, Novo retains patent protections for semaglutide in Europe and Japan until 2033, and in the U.S. until 2032, offering some respite against the competitive pressures.
Doustdar, who took over from Lars Fruergaard Jørgensen in August following a decline in market share to U.S. competitor Eli Lilly, remains optimistic about the early reception of the Wegovy pill. He expresses confidence in Novo's potential for volume growth in the coming years. In a proactive measure to bolster financial performance, Doustdar also announced substantial job cuts within the company.
Lilly's Mounjaro injection has been shown in clinical studies to lead to even greater weight loss, intensifying the competition in this lucrative market. By late January, the Wegovy pill had garnered 50,000 prescriptions per week since its launch, marking a promising start for the first oral GLP-1 medication available. Lilly plans to introduce its own pill version in the spring, pending regulatory approval.
The global market for GLP-1 medications is projected to continue expanding, especially with Novo’s rollout of new treatments, including higher doses of Wegovy and the newly launched pill.
Darren Nathan, head of equity research at Hargreaves Lansdown, emphasized the multifaceted nature of the challenges facing Novo, attributing the anticipated decline to Trump's focus on drug pricing, patent expirations, and rising competition. However, he also pointed out the successful launch of the Wegovy pill and highlighted ongoing strong clinical advancements in Novo's pipeline, suggesting there are glimmers of hope.
As Doustdar prepares for his first full-year earnings call, he will undoubtedly face challenging inquiries, particularly if Eli Lilly's forthcoming results tell a different story.
Meanwhile, in London, GSK, the second-largest drugmaker in the UK, has indicated that its sales growth will slow to between 3% and 5% this year, down from last year's 7% growth which totaled £32.7 billion. Initially projecting similar growth for 2025, the company adjusted its forecasts twice throughout the previous year.
This revised outlook reflects the impact of the company's agreement with the Trump administration to lower prescription drug costs for American consumers in exchange for a three-year period without tariffs.
Luke Miels, GSK's new CEO who recently succeeded Emma Walmsley, reiterated the company’s ambitious target of exceeding £40 billion in sales by 2031, stating a commitment to enhance research and development efforts while improving operational efficiency.
GSK reported robust growth across various sectors, including specialty medicines, respiratory health, immunology, inflammation treatments, cancer therapies, and HIV medications. Notably, oncology saw a remarkable 43% increase, climbing to £2 billion, while vaccine sales rose by 2% to £9.2 billion, bolstered by their shingles, meningitis, and RSV vaccines.
Initially, GSK’s share price dipped by 0.6% at the start of trading in London but quickly rebounded, rising by 2% to reach its highest point since July 2001.
Richard Hunter, head of markets at interactive investor, noted the considerable influence of changes in pricing regulations from the White House, especially given that GSK generates 52% of its sales from the U.S. market.
What does this mean for the future of weight-loss medications and healthcare pricing? Will Novo Nordisk recover from this downturn, or is this the beginning of a more significant trend in the industry? Share your thoughts in the comments below!
