Shares of Danish pharmaceutical giant Novo Nordisk A/S (NVO) tumbled 5.08% in trading on Wednesday, following a series of challenges that have shaken investor confidence in the company's near-term prospects. The steep decline comes on the heels of an even more dramatic 21.8% drop in U.S. trading the previous day, as the company grapples with intensifying competition and regulatory hurdles in its key weight loss and diabetes drug markets.
The primary catalyst for the selloff was Novo Nordisk's unexpected downgrade of its full-year guidance. 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 of 13-21% and 16-24%, respectively. This revision stems from weaker-than-anticipated demand for its blockbuster drugs Wegovy and Ozempic in the U.S. market, where the company faces mounting pressure from competitors and regulatory challenges.
Several factors are contributing to Novo Nordisk's market headwinds. The proliferation of compounded GLP-1 drugs, which are unbranded alternatives allowed under FDA loopholes, has eroded Wegovy's market share and undermined the company's pricing power. Additionally, rival Eli Lilly's Zepbound, which has demonstrated superior efficacy in clinical trials, is gaining traction and intensifying competition in the obesity drug market. Regulatory hurdles and the need for increased manufacturing capacity have further complicated Novo Nordisk's growth trajectory. Despite these challenges, the company maintains a strong pipeline of next-generation treatments and 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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