Novo Nordisk Shares Under Pressure as Competition Intensifies

The investment case for Novo Nordisk, once a dominant force in the pharmaceutical sector, is facing a severe test. A fierce competitive battle with rival Eli Lilly and a wave of cautious analyst sentiment are weighing heavily on the stock. With the share price having lost approximately half its value since the start of the year, investors are grappling with a critical dilemma: is this a historic buying opportunity or a classic value trap?

Market confidence is being tested. On Friday, Goldman Sachs contributed to the unease by reducing its price target for the US-listed ADRs (American Depositary Receipts) from $60 to $54. While the firm maintained its "buy" recommendation, this adjustment signals growing caution on Wall Street.

The sentiment from other financial institutions is even more pronounced. Barclays continues to hold a neutral stance, but the stock was recently downgraded to "sell" by another trading bank. HSBC has also withdrawn its "buy" rating. Despite a minor rebound on Friday, the overall trend in analyst opinion is clearly negative, amplifying uncertainty among the investment community.

Institutional Investors Divided

This uncertainty is reflected in the actions of major investors. While institutions such as American Century have significantly reduced their holdings, selling off nearly 30% of their stake, others are using the price decline as an entry point. West Family Investments and Loomis Sayles have notably increased their positions in the company recently.

Should investors sell immediately? Or is it worth buying Novo Nordisk?

The share price performance underscores the depth of the challenge. Having declined by over 50% since January, the stock is deep in negative territory for the year. Although the company posted solid earnings in the third quarter, its revenue fell short of market expectations. This is viewed as another indicator that Novo Nordisk is navigating a painful consolidation phase, with a return to previous highs likely to be a difficult journey.

Price War Erodes Margins

The core of the market's nervousness, however, stems from operational pressures. The fight for market leadership in the weight-loss medication segment is escalating. To counter Eli Lilly's rival drug, Zepbound, Novo Nordisk has been compelled to implement substantial price cuts for its products, Ozempic and Wegovy. Existing customers are now paying significantly less, while new patients are being attracted with introductory offers as low as $199 for the initial treatment months.

Compounding these challenges is potential headwind from government payers. Starting in 2026, several U.S. states, including New Hampshire, plan to restrict cost coverage for these drugs under Medicaid. The rationale is the explosion in spending on GLP-1 medications, which has multiplied since 2019. This combination of competitive pricing and potential reimbursement restrictions is putting significant pressure on investor expectations for future profit margins.