Novo Nordisk stock falls as Deutsche Bank downgrades shares to sell

Novo Nordisk shares fell on Thursday after Deutsche Bank downgraded the Danish drugmaker to Sell from Hold and lowered its price target, citing concerns over the company’s growth prospects.

The company's US shares declined about 2% in trading, with Deutsche Bank cutting its target to 265 Danish kroner from 290 kroner.

The downgrade adds to growing pressure on Novo Nordisk as it faces stronger competition in the obesity-drug market, pricing challenges and setbacks in its pipeline.

Deutsche Bank flags growth concerns

Deutsche Bank analyst Emmanuel Papadakis said the bank had reduced its mid-term revenue estimates following the disappointing results from Novo Nordisk’s Ziltivekimab trial.

The drug failed to reduce the risk of heart attack or stroke in a late-stage cardiovascular study, effectively removing it from the bank’s expectations for future growth.

Papadakis also expects any increase in sales from expanded Medicare coverage of weight-loss drugs in the US to be limited.

He highlighted uncertainty over whether Novo Nordisk can return to meaningful growth in 2027, while also pointing to patent expirations further ahead as another challenge.

The downgrade comes after a difficult period for the company.

Novo Nordisk shares have fallen about 70% from their June 2024 peak, pressured by competition from Eli Lilly and growing availability of lower-cost or knockoff versions of its Ozempic and Wegovy products.

Competition and pricing pressure weigh on Novo

Novo Nordisk has been seeking to reduce its dependence on its established diabetes and obesity franchises by expanding its drug portfolio into treatments for related diseases.

However, recent pipeline developments have raised questions about how quickly those efforts can generate new sources of growth.

The company has also faced pricing pressure, particularly in the US.

A deal under the Trump administration to lower drug prices in exchange for broader coverage of weight-loss medicines through federal health programs has added to concerns about future pricing power.

Competition in the GLP-1 market remains another major issue.

Eli Lilly has continued to strengthen its position, with its oral weight-loss treatment receiving its first European regulatory approval in August.

That puts additional pressure on Novo Nordisk’s Wegovy franchise as both companies expand their oral obesity-drug offerings.

Novo Nordisk shares remain below their 52-week high of 410 Danish kroner, although they have recovered from a 52-week low of 224.3 kroner.

Wegovy pill expansion and investor update ahead

Novo Nordisk said Thursday that Chinese regulators had accepted its application to market the Wegovy weight-loss pill in the country.

The pill has already received regulatory approvals in the US, UK, European Union, United Arab Emirates and Bahrain.

The company is also preparing for a key investor update next month. JP Morgan expects the event to include an overview of Novo Nordisk’s pipeline, including next-generation obesity and diabetes treatments, as well as broader strategic plans.

The upcoming investor event could therefore provide investors with more detail on how Novo Nordisk plans to address its competitive challenges and rebuild growth following recent pipeline setbacks.