Shares of Novo Nordisk A/S (NVO) tumbled 5.06% in pre-market trading on Wednesday, continuing the downward trend following a dramatic 23% drop in the previous session. The Danish pharmaceutical giant is facing significant challenges that have shaken investor confidence and prompted several analyst downgrades.
The steep decline comes after Novo Nordisk slashed its full-year guidance for 2025, citing weaker-than-expected demand for its blockbuster weight loss drugs Wegovy and Ozempic in the U.S. market. The company now forecasts 2025 sales growth in the range of 8-14% and operating profit growth of 10-16%, significantly lower than previous projections. This revision has led to a wave of analyst downgrades, with Barclays, BofA, and Oddo BHF all lowering their ratings on the stock.
The primary factors contributing to Novo Nordisk's market headwinds include intensifying competition from rival Eli Lilly's Zepbound, which has demonstrated superior efficacy in clinical trials, and the proliferation of compounded GLP-1 drugs. These unbranded alternatives, allowed under FDA loopholes, have eroded Wegovy's market share and undermined the company's pricing power. Additionally, regulatory hurdles and the need for increased manufacturing capacity have further complicated Novo Nordisk's growth trajectory. Despite these challenges, the company is actively pursuing strategies to regain market share, including litigation against compounding pharmacies and the introduction of more competitive pricing models.
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