The investment narrative surrounding Novo Nordisk is undergoing a significant shift. After years of soaring expectations fueled by its obesity and diabetes treatments, the focus has turned to concerns over market share, profitability margins, and potential regulatory intervention. A formidable rival, the threat of U.S. price caps, and a valuation not seen in years are converging to pressure the stock. The central question for investors is whether the current correction is overdone.
Political Pressure Emerges from the U.S.
Beyond competitive threats, new political risks are materializing in Novo Nordisk’s crucial American market. Reports from December 16, 2025, indicate that the Trump administration is actively negotiating drug prices directly with Novo Nordisk and Eli Lilly.
The talks center on the “TrumpRx” initiative for certain Medicare patients. The goal is to establish a monthly price of approximately $149 for obesity medications. This would be based on “Most Favored Nation” clauses, which aim to align U.S. prices with the lowest costs available in other reference markets.
While Novo Nordisk has described the discussions as “constructive,” investors are focused on the bottom-line impact. A binding price ceiling at this level would substantially erode the high margins previously anticipated for its Wegovy treatment in the United States. The risk that a core growth driver loses profitability is a key factor in the stock’s recent weakness.
Eli Lilly’s Offensive Intensifies Competitive Strain
Mounting pressure stems significantly from the expanding dominance of U.S. competitor Eli Lilly. As Novo Nordisk revises its 2025 revenue growth forecast downward to a range of 8-11%, Eli Lilly is aggressively ramping up investment.
Several data points highlight the growing challenge:
- Capacity Expansion: On December 16, 2025, Eli Lilly announced an additional $6 billion investment into a new U.S. manufacturing facility.
- Market Leadership: In the critical GLP-1 segment for weight loss and diabetes, Eli Lilly’s Zepbound and Mounjaro have now taken the lead in market share.
- Valuation Discount: Novo Nordisk currently trades at a price-to-earnings (P/E) ratio of roughly 13.24. This sits notably below the industry average of about 22.5 and far under its own historical peaks, when the multiple exceeded 30.
Eli Lilly’s production capacity build-out directly targets a previous industry bottleneck: supply availability. Both companies have struggled with limited manufacturing scale. If Eli Lilly succeeds in resolving this constraint faster, it could permanently weaken Novo Nordisk’s position in the obesity drug market.
Should investors sell immediately? Or is it worth buying Novo Nordisk?
Technical Indicators Reflect Persistent Weakness
From a chart perspective, a clear downtrend remains in control. A brief recovery attempt last week, which saw shares gain about 8%, proved short-lived as the rally was met with renewed selling pressure. Sentiment in the options market also signals caution: for the U.S.-listed shares (NVO), significant put option volume was recently observed at strike prices between $48 and $49, indicating either hedging activity or targeted bets on further declines.
The pressure is equally evident in European trading. Over the past twelve months, the share price has lost approximately 59.7% of its value, with a year-to-date decline exceeding 50%. Closing at 41.50 euros yesterday, the stock trades well below its 200-day moving average, with momentum still pointing downward.
Analysts Identify a Valuation Opportunity
Despite the share price decline, major investment banks have maintained an optimistic stance. Both Deutsche Bank and JP Morgan reaffirmed their “Buy” recommendations for Novo Nordisk on December 16, 2025.
Their thesis is grounded in specific financial metrics:
- DCF Valuation: Discounted cash flow models suggest an intrinsic value near 1,060 Danish krone per share. This calculation implies a potential undervaluation of more than 70%.
- Earnings Yield: With a P/E ratio around 13, the valuation is significantly below levels seen just a year ago, when the stock traded at a multiple above 30.
- Pipeline Potential: While 2025 is marked by forecast reductions and uncertainty, the company is preparing for the launch of an oral semaglutide version (the Wegovy pill) in early 2026. This product could complement the existing injectable form and expand the total addressable market.
This creates a tension between weak price action and a fundamental analysis that continues to signal value potential.
Conclusion: Balancing Risk and Reward
Ultimately, two opposing narratives are at play. On one side lies the fear of sustained market share loss to Eli Lilly and compressed margins from potential U.S. price controls. On the other side is a historically attractive valuation, model-based calculations showing substantial theoretical upside, and a drug pipeline that could deliver a new catalyst with the 2026 Wegovy pill launch. The stock’s future trajectory will likely be determined by concrete outcomes from the U.S. pricing negotiations and credible signals regarding production capacity and commercial strategy in the obesity business.
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