The GLP-1 Crown Slips: Inside Novo Nordisk’s Battle to Keep Its Obesity Drug Throne

The GLP-1 Crown Slips: Inside Novo Nordisk’s Battle to Keep Its Obesity Drug Throne

The numbers that shook markets today only tell part of the story. Novo Nordisk’s third-quarter sales came in at DKK 75 billion—just shy of the DKK 76.2 billion analysts expected—and the company tightened its full-year forecast for the second time in four months. Investors didn’t take it well. Shares dropped 3.7%, leaving the Danish drugmaker trading nearly 50% below its 2025 highs. Analysts are calling it Novo’s toughest year yet.

But hidden in Wednesday’s financial report lies a bigger revelation: the company that once led the global obesity drug revolution is now losing ground in the very empire it built—and its executives know it.

The Hidden Retreat

Buried on page five of Novo Nordisk’s quarterly filing sits a single line that’s giving Wall Street heartburn. The firm’s share of the global GLP-1 market slid from 55.7% to 49.3% in just twelve months. That’s a sharp fall for a company that once ruled the space with near-monopoly strength.

The drop wouldn’t sting so much if Novo’s business were shrinking—but it isn’t. Obesity care revenue jumped 41% at constant exchange rates to DKK 59.9 billion over nine months. Its flagship drug, Wegovy, climbed 54%. The catch? Rival Eli Lilly is growing even faster—much faster.

Last week, Lilly reported quarterly revenue of $17.6 billion, up 54%, fueled by $6.5 billion from its diabetes drug Mounjaro and $3.6 billion from obesity treatment Zepbound. Both use tirzepatide, a direct challenger to Novo’s semaglutide drugs. While Lilly raised its full-year outlook, Novo trimmed its forecast to 8–11% growth, down from a previous range that stretched as high as 14%.

The contrast couldn’t be clearer. Lilly is sweeping up the fresh dollars flooding the weight-loss market, while Novo is fighting just to stay visible.

The DKK 9 Billion Gambit

Novo’s leadership is responding to the pressure like generals at war—strategic moves masked as routine restructuring. This quarter’s DKK 9 billion charge, which cuts 9,000 jobs—about 11% of its workforce—isn’t simple cost-cutting. It’s a deliberate reallocation of money and talent from older businesses to fund a heated arms race in obesity drugs.

The timing isn’t random. By taking the full restructuring hit in Q3 instead of spreading it out, Novo clears its 2026 comparison base just as U.S. insurers renegotiate drug formularies for the new year. The company is pulling resources from insulin and older diabetes treatments to defend its GLP-1 stronghold, even as the fight grows more expensive.

Margins are already feeling the strain. Operating margins shrank from 44.7% to 41.7%. Novo now expects operating profit growth of only 4–7% for the full year—a far cry from the mid-teens gains investors once anticipated. Analysts admit the profit ceiling looks permanently lower than they assumed just a year ago.

Why? Pure market dynamics. Once insurers realized they could pit Novo against Lilly to secure better rebates, both companies’ premium pricing began to crumble. A CVS analysis in September confirmed that health plans can—and will—switch patients between semaglutide and tirzepatide purely based on rebate math. What was once a high-margin breakthrough is turning into a commodity, just like insulin did a decade ago.

The Investment Thesis: From King to King-Maker

For investors eyeing Novo Nordisk in late 2025, the central question has changed. It’s no longer “How big will obesity drugs get?” but “Who’s actually taking home the profits?”

The bullish view still holds in broad strokes. Demand for obesity drugs worldwide is booming and will likely keep growing at double-digit rates. Novo’s research pipeline looks promising, with late-stage trials for cagrilintide and acquisitions aimed at tackling metabolic dysfunction-associated steatohepatitis . Capital expenditures surged 34% to DKK 41.7 billion, showing Novo’s commitment to boosting manufacturing capacity if it can hold onto its market share.

Still, the risk landscape has shifted dramatically. Novo is no longer setting prices—it’s following Lilly’s lead. When Lilly cut U.S. prices by 15% yet still managed to grow, it exposed Novo’s pricing weakness. Novo can’t match that without taking another hit to margins. Reports suggest the company is now courting obesity biotech Metsera and other acquisition targets—a telltale sign that it’s buying time because internal innovation may not close the gap fast enough.

Cash flow adds another wrinkle. Free cash flow dropped 11% to DKK 63.9 billion even though profits rose, as expansion costs ate up capital. That means no big share buybacks anytime soon—just when the stock could use the support. On top of that, the integration of three former Catalent sites, bought to expand fill-finish production, adds operational headaches as the new CEO works through a complex turnaround.

In valuation terms, Novo trades around 20 times forward earnings, while Lilly sits north of 40. That gap isn’t just about sentiment—it reflects a clear competitive hierarchy. Investors expect it to stay wide until Novo stabilizes U.S. prescription trends and proves it can rebuild profit margins post-restructuring. Neither milestone looks close.

For savvy investors, the strategy is straightforward: stay invested in the GLP-1 boom through Lilly’s momentum and keep Novo underweighted versus healthcare benchmarks. Pair trades—shorting Novo while holding Lilly—still look smart, since every earnings report this year has widened the performance gap, not narrowed it.

The next potential shock could arrive in Q4 or early 2026 if rebate adjustments flip. If those favorable rebate accruals that boosted recent quarters reverse, analysts would have to downgrade their estimates for “real” GLP-1 demand growth—potentially triggering another wave of selloffs.

Novo Nordisk may have created the modern obesity drug market and profited handsomely from it. But like many innovators before it, the company now faces the hard truth: building a market and keeping control of it require entirely different skills. The real question now is whether Novo’s restructuring buys it enough time to rebuild its defenses—or merely delays the moment investors concede that Lilly has already claimed the crown in the next round of the obesity drug wars.

NOT INVESTMENT ADVICE