Novo Nordisk stock analysis (NVO) – Selling faster than it consumes

On
Novo-Nordisk-NVO

Novo Nordisk share (NVO) fundamentals, overview

Novo Nordisk is a Danish pharmaceutical company with a history spanning over a century, founded in 1923 in Copenhagen, where its headquarters are still located, as Nordisk Insulinlaboratorium. The company's history is closely intertwined with the discovery and production of insulin, as Novo Nordisk was among the first to start producing insulin on an industrial scale and has now become one of the world's leading diabetes treatment specialists, alongside Eli Lilly. The company's shares are listed on both the Copenhagen and New York stock exchanges, and its market capitalization at one time surpassed giants such as Pfizer and Roche.

Novo Nordisk's main profile is primarily the treatment of diabetes, obesity, and rare endocrine and bleeding disorders. Its best-known products include Ozempic and Wegovy, which belong to the group of GLP-1 receptor agonists, which have proven to be revolutionary not only in the treatment of diabetes but also in the treatment of obesity. The company is also a major player in the fields of insulin analogues (e.g. Tresiba, NovoRapid), growth hormones, and hemophilia treatments.

Market capitalization: 201 billion USD (2025-08-07)
Investor relations: https://www.novonordisk.com/investors.html
iO Charts share subpage: NVO

Novo Nordisk (NVO) stock price

📒Table of Contents📒

I have created a table of contents to make it easier for you to navigate the longer articles:

〽️Market segment analysis〽️

In this section, I examine the dynamics of the market segment, how it operates, who the main players are, and what tailwinds or headwinds the players in the given market have to deal with. I will not analyze companies in depth, but I will touch on the market share of individual companies.

Novo Nordisk (NVO) is a pharmaceutical company. The pharmaceutical segment is incredibly difficult to analyze. For one thing, it is not a single market, but rather a collection of specialists who focus on a specific sub-area. Think about how different the profile of a consumer drug company like Novo Nordisk (NVO) is from a cancer drug company like Merck (MRK), and that's not even talking about vaccine makers like Pfizer (PFE).

Every medicine has a brand name and an active ingredient behind it. For example, the injectable diabetes drug Wegovy, manufactured by Novo Nordisk (NVO), contains the active ingredient semaglutide. A tablet containing the same active ingredient is Rybelsus. This may seem like an insignificant difference at first, but in many cases, consumers do not use a medicine because, for example, they are averse to its form of administration, they do not like to inject themselves, and instead prefer tablets, powder-based preparations, or ointments.

In the pharmaceutical industry, there are basically two types of drugs. These can be:

🔬 1. Chemically produced small molecule drugs

  • 🔬Generic drugs can be made from them
  • 🔬When their patent expires, a completely identical generic can be made, molecularly the same, cheaper, meaning they are very easy to copy.
  • 🔬These are simple, well-known compounds that can be produced in the laboratory by chemical synthesis.
  • 🔬E.g. ibuprofen, paracetamol (these are fever reducers), atorvastatin (cholesterol reducer), metformin (for diabetes) and thousands of others.

If you take out the medicines you find at home, they will typically be chemically produced preparations. For example, look at the active ingredients in painkillers or fever reducers, all manufacturers typically use the same ones.

The difference between generic and biosimilar drugs
source: iO Charts, the difference between generic and biosimilar drugs

🧬 2. Biologically derived drugs – large, complex, protein-based molecules

  • 🧬biosimilar medicines can be made from them.
  • 🧬They are "produced" by living cells (e.g. bacteria, yeast, mammalian cells), genetically programming the cells to produce the desired protein.
  • 🧬E.g. insulin analogs, monoclonal antibodies (Keytruda, Humira), growth hormones and so on.
  • 🧬They are too complex to be 100% molecularly copied, so only a functionally similar, but not perfect, copy can be made, this is called a biosimilar drug.
  • 🧬They are typically developed by biotechnology companies like Amgen (Amgn) or Biogen (Biib), although now every major pharmaceutical company has such products. In fact, biotechnology companies are also pharmaceutical companies, they just work with a different toolkit.

The above is interesting because chemically produced drugs are much easier to copy than biologically produced ones and their cost is also lower, as they do not require nearly as complex procedures. The point of both is that "copy" drugs are much cheaper than if a company had to develop the drug first. That's why a patent protects the company that registered the original drug for years and prevents competitors from entering the market with cheaper drugs, except in one or two special cases, as you will see.

☝🏼One of the most difficult parts of the pharmaceutical industry to analyze is whether or not the drugs developed by pharmaceutical manufacturers will be successful, and what the cost implications of events related to post-launch side effects, such as lawsuits, are.

Pharmaceutical companies develop multiple drugs in parallel, in different areas. The pipeline, which can be translated as a product development chain, refers to the development process during which new drug candidates move from initial laboratory research to official marketing. The pipeline consists of several stages and is key to the strategy of any pharmaceutical company, as future revenues and growth potential depend on the success of these new molecules.

💊Main stages of drug development:

  1. 🩸Preclinical research: Laboratory and animal testing; safety, mechanism of action, and toxicity testing are performed. It usually takes 1-3 years.
  2. 🩸Phase I clinical trial: It involves a small number of healthy volunteers, aiming to determine safe dosing and side effects. It usually lasts one to two years, involving 20-100 patients.
  3. 🩸Phase II study: It involves patients and aims to determine the effectiveness and ideal dose. It usually takes two to three years, involving 100-300 patients.
  4. 🩸Phase III study : A large number of patients, the effectiveness of the drug is tested in comparison to placebo or other therapy, and statistically proven efficacy and safety are the main considerations. It is also called a large sample or late clinical phase study. It can last up to 3-5 years, involving thousands of people.
  5. 🩸Registration/Authorization: submission to authorities (e.g. EMA, FDA), approval, which is something that many drugs fail to achieve, despite the fact that development goes through the four-step process listed above.
  6. 🩸Phase IV (post-marketing): Even after market launch, side effects and long-term effects are monitored.

💰Development time and costs

Developing a new drug can take a decade or a half and cost up to $1 billion, including the cost of failed projects. This incredibly expensive and time-consuming process partly explains why the industry is so profit-oriented and why there are so few players. Most drugs never recoup their development costs, so pharmaceutical companies need a few blockbusters to fund the many failed developments.

☝🏼Specific examples:

  • 💊Novo Nordisk Wegovy (semaglutide for obesity): Semaglutide, originally developed for diabetes, was approved for the treatment of obesity after many years of research, after showing a weight loss of around 15% in phase III studies.
  • 💊Pfizer-BioNTech Comirnaty (COVID-19 vaccine): The vaccine reached the market in record time, about 1 year, due to the pandemic, but this is one of the unprecedented exceptions and should not be interpreted as a general example.
💡The success rate is extremely low: Less than 10% of molecules that reach the preclinical phase eventually reach the market. Therefore, pipeline management and diversification, i.e. running many parallel projects at the same time, is vital for pharmaceutical manufacturers.

In the example below, I will present the world's highest-grossing drug, Keytruda, an oncology drug developed by Merck Co. (MRK), to help you understand the complexity of the process. You can read our full Merck stock analysis here: Merck (MRK) Stock Analysis

💊The world's highest-grossing drug: Keytruda

Keytruda (active ingredient: pembrolizumab) is a biological medicine, specifically a monoclonal antibody, developed by Merck & Co. It is not generic and cannot be easily copied, as it is a complex immunotherapy product produced from living cells.

🧬 What is Keytruda?

Keytruda is a type of immune checkpoint inhibitor: it binds to the PD-1 protein, activating the immune system to recognize and destroy tumor cells.

Indications (Currently approved for over 20 different tumor types):

  • Melanoma
  • Non-small cell lung cancer
  • Renal cell carcinoma
  • Head and neck cancer
  • Bladder cancer
  • Cervical cancer
  • Classical Hodgkin lymphoma, etc.

💰 How much did it cost?

The price of Keytruda is very high, it is one of the most expensive oncology drugs:

  • Price in the USA: a single infusion (200 mg, every three weeks) approximately 10000–13000 USD, up to 150000–180000 USD/patient annually.
  • Merck generated more than $25 billion in annual revenue two years ago from Keytruda sales alone, making it the world's top-selling drug (ahead of Humira, made by Abbvie).

Such drugs, like movies, are called blockbuster drugs. I would rather not go into it because I explain it in detail in the Merck Co. (MRK) analysis (MRK stock analysis), but in the past five years, the company has made over $100 billion! on Keytruda, which currently accounts for a third of the company's revenue.

⏳ Development time

  • The research began around 2006.
  • It received its first FDA approval in 2014, initially for melanoma.
  • The development time was therefore 8 years, involving thousands of patients and costing hundreds of millions, and according to some estimates, over 1 billion USD.

The drug is protected by a patent until 2028, so it is currently not possible to make biosimilars from it. From the above, it is clear that it is very worthwhile to develop blockbuster drugs, but the risk of a company failing with a given drug is also huge. That is why drugs are protected by very strong patents, but what is this legal protection enough for?

🧾 How long is a drug patent?

  • Basic patent term: 20 years from the filing date
  • However, in the case of medicines, licensing takes a long time, so the patent can be extended by +5 years through a "Supplementary Protection Certificate" (SPC).
  • In the USA, the FDA can grant additional exclusive distribution rights (e.g. for biological agents for 12 years), these do not represent patent protection, but market protection.

🔄 What happens after the patent expires?

  1. Biosimilars or generic versions may appear.
  2. Competition puts price pressure on the original manufacturer, the price can drop by as much as 30–70%.
  3. The manufacturer loses the exclusive distribution right, so its revenues decrease, this is called the "patent cliff".
  4. Companies are therefore trying to bring new indications, new formulations or combination therapies to market to extend the lifespan around the product. For example, the next generation of Ozempic will be CagriSiema.
  5. In many cases, manufacturers develop biosimilars themselves to retain a share of the market, as their development is cheaper than the original product.

In the case of Keytruda, Merck is already working hard on new immunotherapy combinations and new PD-1 inhibitor molecules to maintain its dominance even after the patent expires.

📌In practice: Between 2020 and 2023, I had exposure to a lot of pharmaceutical companies, I certainly had shares in GSK, Amgen, Pfizer, Bristol-Myers Squibb, Abbvie and Merck, as well as their spin-offs, but I got out of most of them precisely because of the above, difficult-to-predict problems. A good example of losing a patent is the Humira drug developed by AbbVie, which expired in the USA in 2023, and several biosimilar competitors have appeared, e.g. Amgevita and Hyrimo. AbbVie's revenue from Humira fell from 23 billion USD to 14 billion USD in one year, which is a brutally big difference. That's why I got out of the stock three years ago at around 170 USD.

🇺🇸How is the American health insurance system structured?

Normally, if you want to buy something from a manufacturer, you go to their store and buy their product. This is a two-element chain, but often there is a distributor who intervenes as an intermediary in the process, so most of the time it is a three-element chain. For example, the bread is baked by the baker, the retail chain buys it, and you go into the retail chain's store and buy the bread from there. This is not the case in the American healthcare system, where the same thing has six elements! This is one of the reasons why the American state spends an awful lot on health insurance, which is 17-18% of GDP. The basis for comparison is the EU average, which is 11%, in Germany it was 12.9% in 2021 during the COVID epidemic, while in the model country Austria it was 11.2%.

1.🏭Pharmaceutical manufacturer

The pharmaceutical manufacturer is responsible for the development, manufacture and initial distribution of the drug. The products are usually sold to wholesalers or directly to pharmacies. It is very difficult to buy drugs directly from the pharmaceutical manufacturer, but there are efforts to do so, such as the NovoCare cash-pay model from Novo Nordisk (NVO). The problem with many intermediaries is that:

  • the pharmaceutical company develops the drug, so there is a large cost on their side
  • the manufacturer's patents expire
  • the manufacturer has the products approved by the FDA
  • the manufacturer must compete with the competition

🚨Yet, it only receives 13% of the money in the healthcare system.

2.🏥Health insurers

Health insurers, such as UnitedHealth, Cigna, and Anthem, cover the cost of providing patients with medications. They work with PBMs to optimize drug prices and ensure patient access.

3.🧾Pharmacy Benefit Manager (PBM)

PBMs are intermediaries who negotiate with health insurers and drug manufacturers. They are responsible for obtaining discounts and rebates on the price of drugs and managing the drug list (formulary). PBMs also often contract with pharmacies to determine payments and co-payments. A PBM is essentially a broker who negotiates the price of a drug so that it can be included in the health care system and reach more patients. It keeps a portion of the negotiated amount for itself and returns the rest to the insurer.

4.💊Pharmaceutical wholesalers

Wholesalers, such as McKesson, Cardinal Health, and AmerisourceBergen, purchase drugs from manufacturers and distribute them to pharmacies, hospitals, and other healthcare providers. They are called pharmaceutical distributors.

5.🏥Pharmacies

Pharmacies are the final point of contact for patients to receive their prescribed medications. Pharmacies have direct contact with patients and are often the ones who collect co-payments. Many distributors also have pharmacy chains.

6.👤Patients

Patients eventually receive the medications and usually pay a co-pay for the medication. The amount of the co-pay depends on the insurance plan and the type of medication.

📌In practice: Putting all of the above together, the pharmaceutical company manufactures the drug, tests it, and if it is successful, it goes to the drug regulatory agency, the FDA, and gets the drug approved. After FDA approval, it becomes apparent through various insurances, such as Medicaid, Medicare, and private insurance, that the population needs the drug. The insurer turns to the PBM to drive down prices and add the drug to the formulary according to the insurer's requirements. Once this is done, the doctor examines the patient, writes a prescription, the subsidized portion of which is paid by the insurance company, or rather by the state through the insurance company. The patient goes to the pharmacy, where he pays a co-payment, where the medicine reaches him through the drug dealers. Clear as day, isn't it? If not, here is an even more complicated diagram of the healthcare value chain:

the US healthcare value chain
source: Drug Channel Institute, the US healthcare value chain

The problem with all of this, apart from being unnecessarily complicated and expensive, is that most of the money in the healthcare system doesn't go to those who take the risk in developing the drugs. Instead, it's distributed as follows:

  • pharmaceutical manufacturer: 13%
  • hospitals: 28%
  • doctors' offices: 26%
  • the administrative cost of health insurance: 8%❗
  • insurers and PBMs: 25%❗

🫰🏼Who pays the medicine bill?

As I mentioned above, the price of oncotherapy drugs is often over 100-200 thousand USD per year, which the vast majority of patients would not be able to pay out of pocket. In the USA, once the FDA has approved the commercialization of a drug, public insurance systems such as Medicare and Medicaid decide in a separate process on the conditions under which the drugs will be reimbursed. Private insurers such as Blue Cross, Aetna, Cigna, UnitedHealthCare (UNH), etc., use their own internal protocols to decide whether to include a drug on their own list of subsidized drugs. The insurer often makes a deal with the manufacturer and thus receives a discount on the list price for the given drug.

If an insurer accepts the drug:

  • 🫰🏼Usually 80–90% of the cost of the drug is paid by the state (and not the insurance company, they are just intermediaries).
  • 🪙The patient pays a co-payment, which can be 5–20%, or even thousands of dollars per year.
  • 💰Some nonprofit funds also cover the deductible, especially for cancer patients.

And why is all this important and what did I want to point out? The price of medicines:

  • 🇺🇸USA
    • Ozempic: $1000 per month
    • Wegovy: $1300 per month
  • 🇨🇦Canada
    • Ozempic: $147 per month❗
  • 🇬🇧United Kingdom
    • Ozempic: $93 per month❗
☝🏼The bottom line from the above is: if an insurance company adds a very expensive but subsidized drug to the formulary list, it will become available to a much larger audience. Thus, such cases usually significantly boost the revenues of the company that developed the drug, but they also earn less per dose.

🧾 Example: Keytruda

  • FDA approval: 2014
  • Accepted by Medicare and private insurers (as it is a life-saving, first-line treatment)
  • Merck offers discounts, but the list price is up to 150-180 thousand USD per year (otherwise it would be 200-220 thousand USD)
  • The patient typically only pays a few thousand USD out of pocket if they have insurance

In Europe, the situation is somewhat simpler, because most countries have state health insurance, which usually reimburses up to 90% of the price of medicines. In the US, however, this is not the case. Last year, an estimated 26 to 28 million people in the US did not have health insurance, which is 7 to 8% of the population. This number has decreased in recent years due to the Affordable Care Act, also known as Obamacare, but millions still live without insurance.

🙋‍♂️Novo Nordisk (NVO) specialties🙋‍♂️

In this section, I examine what specialties the analyzed company has, what its position is in the market, and whether it does anything differently than its competitors. If so, what and how, and what impact does this have on their operations.

A little Novo Nordisk (NVO) history

Novo Nordisk (NVO) was formed in 1989 through the merger of two Danish companies, but its roots go back to 1923, when Scandinavian researchers were among the first to produce insulin using a newly discovered process. One of the company's main goals was to make life-saving insulin treatment available to diabetics in Denmark and Europe. However, to understand the company's full story, we need to include the University of Toronto and the pharmaceutical company Eli Lilly (LLY), which is to Novo Nordisk (NVO) what Real Madrid is to Barcelona.

💡Before 1921, insulin-dependent type 1 diabetes could not be cured. This is an autoimmune disease that develops at a young age, unlike type 2 diabetes, which typically develops in adulthood and can be traced back to an unhealthy lifestyle, obesity, lack of exercise, and in some cases, genetic predisposition.

Usually, the word diabetes refers to type 2, but the word diabetes can be used for both. But let's go back to the story of Novo Nordisk (NVO). Doctors already knew that the symptoms of diabetes include extreme thirst, frequent urination, and unexplained weight loss. The only treatment was a starvation diet with an extremely low calorie intake, which is why the condition was called “hunger disease.” In the advanced stages of diabetes, the body cannot properly utilize glucose because the body does not produce enough insulin, so no matter how much someone eats, the body cannot process the food. Therefore, for lack of a better word, it starts to get energy from its own fat reserves, which is why extreme weight loss occurs. Starvation, on the other hand, resulted in the fact that although the symptoms of diabetes were alleviated, the patient died of starvation after a while, meaning that severe diabetes was equal to prolonged suffering and ultimately death.

The discovery of insulin actually happened in parallel in history, as explained in the Acquired video above. In 1920, a scientist was nominated for the Nobel Prize for his research related to insulin, a certain August Krogh. He started to deal with the problem because his wife, Marie Krogh, suffered from type 1 diabetes. His wife was no ordinary person either, as she was the first woman in history to earn a doctorate in physics in Denmark, and her husband was also one of the founders of Nordisk, later Novo Nordisk. An interesting side story of August Krogh's life is that at the University of Copenhagen, where he studied, his doctoral advisor was Christian Bohr, who is the father of Niels Bohr. His son is also a Nobel Prize-winning physicist, the father of atomic structure and quantum mechanics, who participated in the development of the atomic bomb, among other things. So, there were quite a few brains working in the environment of the later Novo Nordisk, and the seeds fell on fertile soil.

Meanwhile, research on a similar topic was also being conducted at the University of Toronto, which ultimately led to a result for which Sir Frederick G Banting, Charles H Best and JJR Mcleod received what in 1921? A Nobel Prize, of course. 

💡Since it was not yet ethical to make money from university drug research at that time, an American pharmaceutical manufacturer, Eli Lilly (LLI), was asked to continue the experiments. The agreement was made on the condition that if the company advances in its research, it will share its results with the University of Toronto. In exchange, Eli Lilly will be able to keep the brand name of the drug and market the product.

In 1922, Marie and August Krogh traveled to Canada, where the scientists shared their knowledge, and then the Krogh couple requested permission to develop insulin-based products and manufacture the life-saving drug, all in Denmark. After returning to Denmark, they were joined by Hans Christian Hagedorn, who diagnosed Marie Krogh's diabetes, and August Kongsted from the Lion Chemical Factory, who scaled up insulin production, and they founded the company Nordisk Insulinlaboratorium. Nordisk synthesized and extracted insulin from animal pancreases based on the Toronto methodology and used it to produce the first diabetes drug to be marketed in 1923, Insulin Leo, named after the factory.

Since the three scientists were not particularly business-oriented, but they needed employees to produce, they had to pay taxes, they had to have the necessary equipment for production, etc., they had to come up with some kind of corporate structure. So they created the Nordisk Foundation, which owned 100% of Nordisk, and this became the current corporate structure of Novo Nordisk (NVO), as you will see later. This structure is not that uncommon, LEGO and Maerks also have such a foundation corporate structure. The Nordisk Foundation provided insulin to patients in Scandinavia at the cost of production, while they charged market price for exported products.

💡Due to the above structure, 77% of the voting shares are still owned by the Nordisk Foundation, along with 28% of the freely tradable shares.

Two former Nordisk employees, Thorvald and Harald Pedersen, who managed insulin production at Nordisk, fell out with Hagedorn and founded their own company, Novo Terapeutisk Laboratorium, in 1925. Since insulin could not be patented in Denmark, they also started to develop such products, becoming rivals to Nordisk Insulinlaboratorium and developing inventions such as the insulin needle. And they hated each other, until 1989, when the two companies merged to form the pharmaceutical company Novo Nordisk (NVO). Novo Nordisk (NVO) was a specialist in insulin products for decades, continuously developing insulin formulations (e.g. long-acting, fast-acting, premixes), and thus becoming a global player.

💡I think there are two lessons to take away from the above: firstly, the market was already huge back then, so it was worth it for more companies to enter and compete there. Second, because of the constantly growing market, all companies were able to develop together, and the same is roughly visible in the consumer pharmaceutical market today.

🎯 Novo Nordisk – what is the company doing?

Novo Nordisk is now present in 4 main healthcare areas, but their main profile is still the production of diabetes and anti-obesity drugs:

AreaFeatured productsMarket position
DiabetesInsulins, GLP-1 agonists (Ozempic, Rybelsus)🌍 World leader, by ~45%
Obesity treatmentWegovy (semaglutide), Saxenda (liraglutide)🚀 Market leader, fast growing (~35-50% in the US)
Rare diseasesGrowth hormones (Norditropin), hemophilia preparations🟡 Smaller but stable segment
Other suspected disease areasLiver diseases (NASH), Alzheimer's disease, cardiovascular diseases🔬 Growth area

Before 2021, Novo Nordisk (NVO) did not derive the majority of its revenue from anti-obesity drugs, which many call miracle cures. Novo Nordisk had been a strong, profitable global pharmaceutical company for decades. Until 2020, the company lived almost exclusively from diabetes treatment, building its empire mainly on insulin products and GLP-1 agonists.

I would like to explain the market size a little, because it will be clear why Novo Nordisk (NVO) has started to trend towards consumer drugs:

  • Total Diabetes Market (May 2025): 44.3% share, Based on NVO 2025 Q2 report
    • Insulin market: 43.3% share (USD 40 billion, 8.3% CAGR)
    • GLP-1 Market: 55.1% share (USD 200 billion market within five years, likely with a +20% CAGR)
    • Rare Diseases Market: ? (USD 195 billion, growing to USD 587 billion over a decade, with a CAGR of around 10%)
    • Other areas: ? This mainly depends on what other areas GLP-1 drugs can be used in, let's consider this a $0 market for now from Novo Nordisk's (NVO) perspective
Novo Nordisk, 2025 Q2 report, share of the insulin market
source: Novo Nordisk, 2025 Q2 report, insulin market share

According to the WHO, the number of people living with diabetes has developed and will develop as follows:

  • 1980: 108 million
  • 2014: 422 million
  • 2030: 643 million
  • 2045: 783 million

This dramatic increase is primarily due to the prevalence of type 2 diabetes, which accounts for approximately 90% of all diabetes cases worldwide. Approximately 537 million adults currently live with diabetes.

Regarding the GLP-1 consumer drug market, I am convinced that no one currently knows exactly how big a market Novo Nordisk (NVO) has. The situation is changing incredibly quickly, partly because the market is growing very quickly, and partly because the emergence of newer drugs is always modifying the formula. Even if we were to calculate the current market share of each company, the math would almost certainly be different in 1 year. I haven't read much clear data on this, just how much each drug has grown compared to the previous year or quarter. But for those who want an exact number, I've read all sorts of things about Novo Nordisk (NVO) with a market share of between 35-55%. What is certain is that the first two places are held by Novo Nordisk and Eli Lilly, with the others, especially Sanofi, following far behind.

growth of the rare disease market
source: Towards Healthcare, growth of the rare disease market

As for the rare disease market, that's also a brutally fast-growing segment. What's included? Cystic fibrosis, Duchenne muscular dystrophy, Huntington's disease, hemophilia, nonalcoholic fatty liver disease (NASH), Alzheimer's disease, all kinds of neurodegenerative diseases, to name a few. Actually, Novo Nordisk (NVO) is not the market leader in this segment, but it has very stable revenue from hemophilia and NASH products.

As you can see from the above, while the insulin market is growing nicely, the consumer drug market is a much larger and faster growing area. I am intentionally considering the other segments as $0 for Novo Nordisk (NVO) because we don't have the clinical trial results yet and I wouldn't want to bet on something that has an uncertain outcome. Fortunately, that is not currently priced into the share price.

💉 1. Insulin: Novo Nordisk's historical foundation and main source of revenue (1923–2020)

Novo Nordisk is still the world's largest insulin manufacturer, and for a long time this was the company's main profile:

  • Products: NovoRapid, Levemir, Tresiba, Insulatard, Mix preparations.
  • Types: rapid-acting, long-acting, mixed, analog insulins.
  • The basic product insulin is good for treating type 1 and type 2 diabetes, so there has been a continuous, high-volume global demand for it.
  • The company had its own vertically integrated production system, which allowed it to produce at low cost and with high quality.
  • Even around 2017–2018, more than 60% of their revenue came from insulin products.

So how do GLP-1 agonists, cholesterol levels, and similar concepts come into play? In 1973, a major scientific breakthrough occurred that later completely reshaped the pharmacological treatment of cardiovascular diseases. A Japanese biochemist, Akira Endo, an employee of the Sankyo pharmaceutical company, discovered a natural molecule that inhibited an enzyme called HMG-CoA reductase, a key enzyme in the synthesis of cholesterol. This molecule was the first of the so-called statins to be able to lower cholesterol levels. In 1987, the pharmaceutical company Merck launched the first cholesterol-lowering drug, which significantly reduced the incidence of heart attacks and strokes.

💡These were still chemical molecules, so they were very easy to copy, anyone could manufacture them, and their prices had fallen rapidly over the years. In contrast, GLP-1-based drugs are produced biologically, and they can be copied with biosimilar drugs.

🔬 2. Novo Nordisk and GLP-1 agonists (from the mid-2010s)

  • Victoza (liraglutide): It was introduced in 2010 for type 2 diabetes and became a great success.
  • This was the first GLP-1 agonist that had to be given daily, but it was still much more convenient than multiple daily insulin.
  • This was followed by the weekly Ozempic (semaglutide), which was launched in 2017.

📊 The GLP-1 line took over the leading role from insulin preparations by 2019, but at that time it was not used for obesity, but for lowering blood sugar levels.

Novo Nordisk (NVO)'s main focus is the treatment of type 2 diabetes and obesity, but these are closely linked to cardiovascular risk, which is why a large proportion of diabetic and/or overweight patients are also prescribed statin therapy. Statin-based drugs are taken by 200 million people and have grown into a $15 billion market. These drugs essentially mimic the action of GLP-1 hormones, which is why Novo Nordisk (NVO) recently began specifically researching the effects of GLP-1 drugs (e.g. Ozempic, Wegovy) on cardiovascular events, entering an area previously dominated by statins.

GLP-1 is an abbreviation for glucagon-like peptide-1, a natural gut hormone that plays an important role in regulating blood sugar levels and reducing appetite. GLP-1 is an incretin hormone that is produced by the gut after meals, and its main role is to help the body release the right amount of insulin when blood sugar levels rise. It also reduces glucagon levels (which would raise blood sugar), slows gastric emptying, and reduces appetite, thereby helping to stabilize blood sugar levels and reduce hunger.

☝🏼In addition, according to some research, GLP-1-based drugs may also be effective against Alzheimer's and Parkinson's diseases and certain liver diseases, meaning there was enormous potential in this area of development.

🧪 3. Strategic change of direction: not only blood sugar levels, but also cardiovascular protection

  • Novo Nordisk has consciously shifted from endocrinology solutions to cardiometabolic solutions in the 2020s.
  • The SELECT clinical trial in 2023 demonstrated that Wegovy (GLP-1 agonist) significantly reduces cardiovascular mortality in non-diabetic obese patients.

So Novo Nordisk (NVO) simply discovered during clinical trials such as SCALE or STEP that patients who were treated with GLP-1 agonists for type XNUMX diabetes not only showed better blood sugar levels, but also regularly lost weight.

🌍How many obese people are there in the world?⚖️

There is a great website called Worldometers where you can continuously track the growth of the Earth's population. At the time of writing, there were 8.24 billion people on Earth. Unfortunately, a significant portion of humanity is overweight or obese, which means the following:

Overweight: BMI ≥ 25

  • 🟢Grade I obesity: BMI 30–34.9 (43% of Americans)
  • 🟡Grade II (severe obesity): BMI 35–39.9
  • 🔴Grade III (severe or morbid obesity): BMI ≥ 40

If you want to know the rates, according to the World Obesity Federation's 2024 report:

  • Among adults: Up to 43%
    • 🇧🇷Overweight (BMI ≥ 25): 26%, approximately 2.1 billion people (of the total population)*
    • 🇧🇷Obese (BMI ≥ 30): 16%, about 1.3 billion people (of the total population)
  • Children and adolescents (5-19 years):
    • 🧒🏼Overweight and obese: 4%, about 340 million people (of the total population)

* Some reports show even worse results, for example, the WHO estimates that 2.5 billion adults are overweight and 1 billion are obese. The most shocking figure is that 35 million children under the age of five are already overweight.

Of course, this does not mean that companies will reach this many people with their consumer medicines, but the maximum achievable market size, TAM, could be around 3.6-3.7 billion people. Although the actual market size that can be served cannot be accurately calculated, as there is no data, the following should be taken into account:

  • ☝🏼Not everyone will have access to medicines
  • ☝🏼They won't be allowed everywhere
  • ☝🏼not everyone will be able to afford it or will not fall into the insurance category for whom the insurance company or healthcare system will pay for the product

Considering the above, the accessible population could be somewhere around 10-15%. Based on the above numbers, this means that 370-550 million people could be affected. All you need to know is a number: how many people currently have regular access to and use them or can afford them, and the closest figure I found is: 5 million people.

💡In other words, starting from the currently served market size of 5 million people, the consumer pharmaceutical market could grow up to a hundredfold(!) without taking into account that the population or the proportion of obese people will increase.

I would add to the above that the population will peak somewhere around 2050 according to current estimates and it is not really clear what would cause people to start losing weight en masse, not counting the effects of consumer drugs. So, if we make a 10-year estimate, then the following is roughly what we can expect, for which I have drawn a very rough graph, purely for illustration purposes:

source: own, estimated increase in overweight and obese people by 2035

As the figure shows, the population will be somewhere around 9 billion within a decade, so based on a 10-15% rate, the number of people using the drug could increase to 410-610 million. According to Morgan Stanley, the market could reach 150 billion USD within a decade (Weight Loss Medication Market), while Morningstar estimates the same at USD 200 billion within five years, and the diabetes market will be an USD 80+ billion segment. As a point of comparison, Novo Nordisk (NVO) currently has revenues of USD 45.3 billion (DKK 311.94 billion), of which the revenue share of products specifically designed for consumer use is somewhere between USD 9-10 billion, so they account for ~20% of the company's revenues, but they are growing at an accelerating rate, as can be seen in the chart below.

Novo Nordisk, annual report 2024
source: Novo Nordisk, annual report 2024

🔬Advantages of Novo Nordisk (NVO) consumer medicines

There are also some huge advantages of the natural gut hormone GLP-1 (glucagon-like peptide-1) over generic medications:

  • 🔄They have a powerful psychological effect: Weight loss transforms people's self-image, they feel better about themselves and they don't really want to gain the weight back. Although the GLP-1 drug itself is not addictive in the traditional sense, according to our current knowledge, they will be very motivated to continue the treatments. A kind of psychological dependence is developed, since the weight loss can be regained when the medication is stopped. This is why it is said that the product is "sticky" in nature, meaning that consumers are reluctant to part with it.
  • 🔬GLP-1 drugs slow gastric emptying: GLP-1 helps the substances taken during meals to remain in the stomach for longer, so the feeling of satiety lasts longer. This reduces appetite in the brain, as the centers that control appetite in the hypothalamus, which regulates eating habits, are also activated.
  • 🍷 alcohol consumption decreases: Nausea may be increased due to slow gastric emptying, especially if patients consume alcohol or eat heavy meals. Alcohol irritates the stomach and, in combination with GLP-1 drugs, may be more closely associated with gastrointestinal side effects such as nausea or diarrhea.

The above effect on reducing alcohol consumption has caused such serious concern among alcohol producers that it has been mentioned by the management of Brown-Forman (BF.B) and Diageo (DEO), and I even read about it in one of LVMH's quarterly reports. I have also analyzed the first two stocks, you can find these articles here:

💰How does Novo Nordisk (NVO) make money and what market advantages does it have?💰

In this section, we examine what exactly the company does to generate revenue, what products and services it has, how indispensable they are. Does it have any competitive advantage (economic moat), how defensible is it, and whether the trend is decreasing or increasing, and what is likely to happen in the long term.

Based on what we've seen so far, you might think that Novo Nordisk (NVO) only produces consumer drugs, but that's not true. In fact, it's hard to separate them, as most of their drugs not only treat diabetes, but also reduce vascular risks AND promote weight loss, so they can be prescribed for such applications as well.

1. 🩺 Diabetes treatment

Diabetes medications are the company's largest source of revenue. Key products include:

  • Ozempic® (semaglutide): GLP-1 receptor agonist, weekly injection for the treatment of type 2 diabetes
  • Rybelsus® (oral semaglutide): GLP-1 receptor agonist, daily tablet for the treatment of type 2 diabetes
  • Victoza® (liraglutide): GLP-1 receptor agonist, daily injection for the treatment of type 2 diabetes
  • Tresiba® (insulin degludec): Long-acting insulin
  • NovoRapid® (insulin aspart): Fast-acting insulin
  • Fiasp® (rapid-acting insulin aspart): Insulin used before meals
  • Levemir® (insulin detemir): Long-acting insulin

2. ⚖️ Obesity treatment

Drugs for the treatment of obesity are a rapidly growing market. The most important products are:

  • Wegovy® (semaglutide): weekly injection, for the treatment of obesity.
  • Saxenda® (liraglutide): daily injection, for the treatment of obesity.
  • CagriSema® (combined semaglutide and cagrilintide): a new combination drug for the treatment of obesity, which will be marketed in the USA from 2026.

These medications are not only effective in reducing weight, but also play a role in reducing the risk of cardiovascular events. It is also worth knowing that CagriSema is now being manufactured with a new technology, SNAC, which increases absorption efficiency, so it is expected to achieve better efficiency in terms of consumption than the previous generation Wegovy. CagriSema is also being studied in Alzheimer's and liver disease, but approval for these types of treatments is still awaited.

3. 🩸 Treatment of rare diseases

Medicines for the treatment of rare diseases include:

  • NovoSeven® RT (recombinant factor VII): For the treatment of hemophilia
  • NovoEight® (for the treatment of recombinant hemophilia A): For the treatment of hemophilia
  • Rebinyn® (for the treatment of recombinant hemophilia B): For the treatment of hemophilia
  • Tretten® (recombinant factor XIII): For the treatment of rare bleeding disorders
  • Sogroya® (somatropin): For the treatment of growth hormone deficiency

4. ❤️ Treatment of cardiovascular diseases

Medications used to treat cardiovascular disease include:

  • Ozempic® (semaglutide): It is also used to reduce the risk of cardiovascular disease, especially in patients with diabetes
  • Wegovy® (semaglutide): It is also used to reduce the risk of cardiovascular disease.

Why did I list so many products? For two reasons, one is to point out that Novo Nordisk (NVO) is much more than a consumer products manufacturer, and the other is because the list clearly shows that certain products can be used not only in one area, but also in several at the same time.

🩺Effectiveness of consumer medicines

In the past 1-2 years, I have read several times that investors are panicking about a consumer drug showing a few percent better or worse efficacy. However, we must not forget that the effect it has on patients in itself does not tell us much. Because:

  • you don't know how much dose they received
  • you don't know which dose caused which side effects
  • you don't know why they were given such a high dose (it's possible that a higher dose would cause more serious side effects and the subjects' bodies wouldn't be able to absorb it properly, which is why they stayed with the lower dose)
  • you don't know how long a given experiment lasted (you can usually search for them by their name, for example: OASIS-4)
  • You don't know if there were multiple control groups and which one was the one in the news.
  • you don't know if this is the placebo-corrected or uncorrected value that the press reports

So if you see that a consumer drug from, say, Eli Lilly (LLY) or Novo Nordisk (NVO) is doing worse than its competitors, read up on the exact conditions under which the studies were conducted. However, I think that in such a rapidly growing market, which could potentially be a hundred times larger than it is today, it is much more important that everyone can sell their products, so that companies can grow alongside each other.

⏲️Novo Nordisk (NVO) headwinds: Temporary FDA approvals

In 2021-2023, when the consumer pharmaceutical market began to grow explosively, Novo Nordisk (NVO) was unable to meet demand, resulting in a supply shortage. Although the various Novo Nordisk (NVO) products are protected by registered patents, if there is a shortage of products, the US FDA, the Food and Drug Administration, may temporarily authorize the launch of biosimilar products from other manufacturers, which are also cheaper than the branded Novo Nordisk (NVO) and Eli Lilly (LLY) products.

Although Novo Nordisk (NVO) has since expanded its manufacturing capacity, the FDA did not ban the marketing of products covered by the temporary licenses until May 2025 (these are also called 503B GLP-1 preparations). Code 503B is related to the Drug Quality and Safety Act (DQSA), which allows drug manufacturers to manufacture certain drugs for their own needs without having to register each drug separately with the FDA.

Quote from the United States Pharmacopeia (USP): “Millions of drugs are compounded in the United States each year to meet the unique needs of patients. Compounding provides access to patients who cannot use commercially available formulations due to dosing requirements, allergies, or other rare diseases."It is primarily given to vulnerable age groups such as the elderly or children, who for some reason do not tolerate the usual dose well or are allergic to certain ingredients. Pharmaceutical manufacturers can mix up new preparations for them."

These medications often contain combined (mixed) dosage forms, which is why they are collectively called “compounded” medications, which are made from ingredients that doctors do not always use as standard medications.

💡This also provides a loophole for manufacturers in cases where someone is being treated with a trademarked drug, such as Ozempic or Wegovy, but instead receives such mixed drugs, so they do not have to be withdrawn from the market.

At the time of writing, in early August 2025, there are still about one million people using biosimilars, which is clearly hurting Novo Nordisk's (NVO) business. This means that not only Novo Nordisk's (NVO) Ozempic, CagriSema, Wegovy, Rybelsus compete on the market with Eli Lilly's (LLY) Mounjaro and Turlicity, but also other non-branded biosimilar drugs. The latter are expected to disappear from the market by the end of 2025, and this demand will be divided between Novo Nordisk (NVO) and Eli Lilly (LLY).

🏰Economic moat🏰

In this segment, I examined whether the company has any economic competitive advantage, which Warren Buffett referred to as an “economic moat,” which prevents competitors from besieging the company’s fortress, i.e. its business, and taking over its market. In the case of Novo Nordisk (NVO), these could be the following:

  • 🫸Cost/scale advantage: yes. All large pharmaceutical companies can produce their drugs cheaper than small ones, but the biggest cost of producing drugs is development. Moreover, the market is polarized, consisting of many sub-segments; a company that produces blood pressure lowering drugs is unlikely to produce products used in cancer treatments.
  • 🫸Switching cost: yes, the switching cost of medications is extremely high. On the one hand, patients cannot switch on their own, as they are prescribed by a doctor, and on the other hand, they cannot do so because their lives may depend on it, just think of oncology drugs. That is why many patients take the same medication for years or decades.
  • 🫸Network effect: there is none.
  • 🫸Intangible assets, know-how, trademark: yes, very high. First, pharmaceutical companies accumulate an incredible amount of professional knowledge in a particular field, which is very difficult to reproduce. Second, the products are protected by patents, which means that it is theoretically impossible to bring a similar product to the market for years. An interesting question is whether there is brand power. It is very rare for a drug name to function as a real brand. Ozempic is one of the exceptions, as it was the first known consumer drug that was mentioned by celebrities, Youtubers, TikTokers or even Jimmy Kimmel at the Oscars, and Elon Musk, for example, admitted to using the drug. Therefore, many people currently identify consumer drugs with this brand name.
  • 🫸Barriers to entry: high. At least in some sub-segments, where complex biologically based, molecular products have to be developed and manufactured. Relying on a single product is a huge risk, so many developments have to be kept in the pipeline to disperse this risk by the manufacturer, which is very costly, time-consuming and knowledge-intensive. In addition, ramping up production capacity is also capital-intensive, plus there are a lot of government regulators with whom you also have to somehow agree. We are talking about an incredibly complex process that is very difficult to build from scratch. It is no coincidence that the heritage of most pharmaceutical manufacturers dates back a very long time, with the foundations of Novo Nordisk (NVO) dating back more than 100 years.
☝🏼Novo Nordisk (NVO) has been battling pharmaceutical giant Eli Lilly (LLY) in the duopolistic diabetes market for decades, and this competition now looks set to continue in the consumer drugs subsegment. Novo Nordisk (NVO) unquestionably has wide moats in the territories where it markets its products.

There are many supporting megatrends that are helping these two companies. For example, vanity, healthier lifestyles, population growth and obesity rates are increasing their market at an astonishing rate. The current next-generation star drugs are CagriSema and Mounjaro, with which the two giants are going head to head, but this game is far from over.

As consumer drug development seems to be a very lucrative business, more and more companies are looking to join the market. Examples include Pfizer, Roche, Amgen, Boehringer Ingelheim, which is developing together with the Danish Zelanda Pharma, and some smaller companies such as Terns Pharmaceuticals, Viking Therapeutics and Structure Therapeutics. To quote John F. Kennedy, “A rising tide lifts all boats,” so I think there will be a lot of products in this market that will be successful in the next few years. Then we’ll see who dominates the market.

🎢Metrics of Novo Nordisk (NVO)🎢

In this section, I examined what metrics characterize the company, how it stands on the revenue side, what margins it operates with, whether it has debt, what the balance sheet shows. I look for items that are extreme – too high debt, high goodwill, etc. - what return on capital the company works with, what its cost of capital is, how the revenue and cost sides are structured. I also examine trends, owner value creation, and how the company uses the cash generated.

📈What is the S&P 500 yield?📉

Compared to previous tests, I have introduced a new section to compare the metrics below. Since many people use the US stock market index as a benchmark and also buy S&P 500 ETFs, it is worth looking at what companies are doing in aggregate (of course, you should be happy if the company you are analyzing exceeds these values).

S&P 500 2024 data:

  • SP&500 revenue growth: +7%
  • SP&500 profit growth: +10%
  • SP&500 gross margin: 45%
  • SP&500 net margin: 13%
  • SP&500 ROE: 15%
  • S&P 500 ROIC: 12%
  • S&P 500 ROCE: 11%

Novo Nordisk (NVO) revenue breakdown by category is as follows, In the first half of 2025 (values rounded):

  • Total revenue: 100%, DKK 78.1 billion (USD 12.1 billion)
  • GLP-1 preparations: 50.7%, DKK 39.6 billion (USD 1.9 billion)
  • Insulin preparations: 19.4%, DKK 15.08 billion (USD 2.35 billion)
  • Anti-obesity preparations: 23.6%, DKK 18.4 billion (USD 2.9 billion)
  • Rare disease drugs: 6%, DKK 4.6 billion (USD 0.7 billion)
Novo Nordisk (NVO) revenue breakdown Q2025 XNUMX, in DKK
source: App Economy Insights, Novo Nordisk (NVO) revenue breakdown Q2025 XNUMX, in DKK

In the picture, IO stands for international operations, i.e. all areas that do not fall into the categories already mentioned. The sets are a bit confusing, but the proportions are what matter, and the fact that the company is sufficiently diversified territorially, you can see this on the left. On the right, the product distribution is detailed into two areas.

Novo Nordisk (NVO) quarterly report, revenue breakdown by territory and product category
source: Novo Nordisk (NVO) quarterly report, revenue breakdown by territory and product category

Let's take a look behind last year's revenue figures, which totaled ~290 billion Danish kroner. As you can see, GLP-1 drugs account for half of the revenue, of which:

Total GLP-1 market: DKK 149 billion (50% of revenue)

  • Ozempic generated ~120 billion DKK in revenue (+100% growth in two years)
  • Rybelsus generated revenue of ~23 billion DKK (+100% growth in two years)
  • Victoza generated ~5 billion DKK in revenue (100% decline in two years)

The total insulin market: DKK 55 billion (17% of revenue), but has grown almost nothing in the last two years, and in fact, last year the sales of the drugs included here even decreased.

In contrast, diabetes drugs: DKK 65 billion (22% of revenue)

  • Wegovy generated ~58 billion DKK in revenue (a tenfold increase in two years)
  • Saxenda generated ~7 billion DKK in revenue (35% drop in two years)

Rare diseases generated a total revenue of ~18.6 billion DKK, which is 6% of total revenue, which is negligible and has not been growing for two years, and has even decreased by about 10%.

From the above, it can be seen that the growth of Novo Nordisk (NVO) is largely driven by the GLP-1 and diabetes segments. To simplify, I'll say that revenue growth depends on sales of Ozempic, Rybelsus, and Wegovy.

Novo Nordisk (NVO) Annual Report 2024
source: Novo Nordisk (NVO) annual report, 2024

Of course, the product development chain is also full of drugs currently under development, where it is worth noting that in the category of anti-obesity drugs marked in blue, there were many drugs in Phase 3 last year, but none that were about to be launched:

list of products in the pipeline
source: Novo Nordisk (NVO) annual report 2024, list of products in the pipeline

Since I am not a pharmacist, I will not go into which product is for what purpose, you can see the current status of the development in the 2024 annual report. What I did notice, however, is that a new generation, oral semaglutide product is coming, which could be a tablet version of the injectable CagriSema. People like this form of intake much better than when they have to inject themselves.

Novo Nordisk (NVO) revenue growth year-on-year
source: Fiscal.ai, Novo Nordisk (NVO) revenue growth year-on-year, in USD

I have included Novo Nordisk's data from reports covering the first quarter of 2025 and the full year of 2024. The reason for this is that the weight loss drug segment of the market is expanding at such an incredibly fast pace that it is very difficult to say exactly how much Novo Nordisk (NVO) will earn in 2025. Especially since they revised their forecasts downwards twice. That's why I've put the annual revenue growth on top and the quarterly growth on the bottom so you can see the difference in slope.

Novo Nordisk (NVO) revenue growth by quarter
source: Fiscal.ai, Novo Nordisk (NVO) revenue growth by quarter, in USD

As you can see, revenue is constantly increasing, although the percentage values are falling, this shows a change in the rate of growth and not a change in revenue. So the numbers are growing at a slower pace, which is why the share price has dropped from DKK 942 to DKK 288! The average growth of companies in the SP500 index is 6-7%, so interpret the numbers in the picture in comparison.

Next are the margins, which Novo Nordisk (NVO) has been excelling at for years. In simple terms, the values ​​in the figure show that the company not only operates with high margins, but also that it generates a sufficient amount of cash after taxes, which can then be used for value-creating things. Interestingly, in December last year, Novo Nordisk (NVO) announced the construction of a 40000 square meter factory worth 8.5 billion DKK, which will be completed in two years and will help ramp up pharmaceutical production. Also in December 2024, the acquisition of pharmaceutical services company Catalent for DKK 16.5 billion, paid in cash, was announced, which left its mark on this metric.

Novo Nordisk (NVO) margins over 10 years
source: Fiscal.ai, Novo Nordisk (NVO) margins over 10 years

It is also worth looking at the cost structure of Novo Nordisk (NVO), as these numbers are what determine the above margins. What you can see in the figure is that the cost of product production, COGS, has been around 15-16% of revenue for years, and the amount spent on development is about 12-14%. These are also directly proportional to revenue growth, so they neither improve nor deteriorate, this is typically the nothing to see category.

Novo Nordisk (NVO) COGS and R&D numbers
source: Fiscal.ai, Novo Nordisk (NVO) COGS and R&D numbers

I have sold several pharmaceutical companies due to their extremely high debt levels, such as Bristol-Myers Squibb in 2022 (BMY). Acquisitions are very common in the pharmaceutical industry, there have been countless such cases at large pharma companies, which usually causes significant debt. The numbers for Novo Nordisk (NVO) look like this:

  • 💰income: DKK 311.94 billion
  • 🤑profit: DKK 111.1 billion
  • 🫰🏼cash: DKK 18.93 billion
  • 💸net debt: $80.33 billion (26% of revenue, 72% of profit)
  • 💶net debt/EBITDA: ~ 0.5
  • 👛interest coverage, EBIT/interest: ~ 17.3

As you can see, the company has some debt, but it could pay it off from its single annual profit. Net debt is gross debt minus cash or cash equivalents. The current figures are after acquisitions and investments, previously it was ~DKK 72 billion. The company is a brutal cash-generating machine, and this ratio is expected to increase even more in the next few years.

Novo Nordisk (NVO) revenues and debt
source: Fiscal.ai, Novo Nordisk (NVO) revenues and debt

🧮What do ROIC and ROCE metrics show?🧮

ROIC – Return on Invested Capital – shows how efficiently the company uses its total invested capital to generate profit. Read more here.

  • It shows the company's fundamental value creation capability.
  • It filters out the impact of the financing structure.
  • If ROIC exceeds the cost of capital (WACC), the company is creating value.

ROCE – Return on Capital Employed – shows how efficiently the company uses its long-term financing sources. Read more here.

  • It measures the profitability of business activities.
  • It does not take into account tax effects.
  • A good basis for comparison between different industry players.
IndicatorWhat does it measure?Who is it useful for?When is it considered good?
ROCETotal return on capitalLong-term investorsIf higher than the industry average
ROICReturn on invested capitalEquity investorsIf higher than WACC
ROEReturn on equityShareholdersIf stable and sustainably high

Novo Nordisk (NVO) shareholder value creation

On the owner value side, I usually look at how the company uses the free cash generated. Basically, a company can do the following things with cash:

  1. funnel it back into the business
  2. reduces debt (there is very little)
  3. pays a dividend (Novo Nordisk (NVO) pays a dividend of 3.7%)
  4. buybacks shares (Novo Nordisk (NVO) has suspended its program until 2025)
  5. buys up other companies

The return on investment in the business is essentially reflected in the costs spent on research and development, but it is a basic nature of pharmaceutical production that a lot of money has to be spent on R&D. In addition, they have also invested in logistics and production capacity, which will bear fruit in the next 1-2 years.

Novo Nordisk (NVO) is a dividend paying company, and at this depressed valuation it pays a relatively high 3.7%. The dividend rate is a bit hectic due to currency movements, and Novo Nordisk (NVO) has also paid periodic dividends several times and has also repurchased shares to a small extent (0.8%), which you can see in the chart below. They used to buy back much more shares, but this year they are stopping this, despite having reduced the number of shares by a total of 37% over the past two decades.

buybacks and dividend payments
caption: Novo Nordisk (NVO), buybacks and dividend payments

Two thoughts on the above: share buybacks do not seem opportunistic to me, since, for example, Novo Nordisk (NVO) was not underpriced in 2023/2024, but rather a pre-determined amount was spent, which is not very value-creating. Excerpts from the 2025 first half financial report:

  • 📜"Novo Nordisk's capital allocation principles focus on attractive internal growth investments, including the significant supply chain expansion, and a dividend payout ratio of around 50% of net profit. Following the step-up in CAPEX investments in 2025, Novo Nordisk is not conducting a share buyback program. An authorization to the Board of Directors to buy back shares was, however, in line with previous years, adopted by the Annual General Meeting on 27 March 2025, should initiating a share buyback program later be deemed relevant.”
Novo Nordisk (NVO) dividend, buyback, debt reduction all in one
source: Fiscal.ai, Novo Nordisk (NVO) dividend, buyback, debt reduction in one aggregate indicator

Unfortunately, management prioritizes a payout ratio of around 50% over opportunistic share buybacks, which I believe would be a much more efficient way to spend money at such a depressed valuation. If we look at the last 10 years, the company has performed much better in this. However, in the case of Novo Nordisk (NVO), the most important thing is to pour money into research and development, because now the company needs to quickly scale its capacities and come to the market with very effective consumer drugs as soon as possible, the rest is really secondary. Especially because their internal rate of return is fantastic.

🇭🇺For Hungarian investors🇭🇺

Hungary has a double taxation agreement with Denmark, in return for which the Danish dividend tax is 27%, so for this reason alone it is not worth buying shares of Novo Nordisk (NVO), or any other Danish company.

The trend of the indicators below is falling, but they start from a very high point and even the current values ​​would be envied by 99% of the market. It is shocking how brutal the company's internal rate of return is. Their average cost of capital, or WACC, varies between 6.5-7.5% depending on the source, while the ROIC is 27.6%, the latter must be higher than the former, then the company creates value, this is clearly evident. These numbers also provide excellent evidence that for companies like Novo Nordisk (NVO), it is good to reinvest as much cash as possible into the business, because that is where the most value is created.

Novo Nordisk (NVO) ROIC, ROCE and ROE values
source: Fiscal.ai, Novo Nordisk (NVO) ROIC, ROCE and ROE values
Interactive Brokers

💵Novo Nordisk (NVO) acquisitions💵

In this section, I examine how acquisitive the nature of the company is and what impact each acquisition had on the life of the company, if any.

Aside from serial acquirers, I can't think of any other market segment that has as many acquisitions as the pharmaceutical industry, so of course Novo Nordisk (NVO) has had countless acquisitions. The answer is that it's often easier to acquire a smaller company with a promising or already marketable product than to spend years and billions of dollars on research. The world's largest acquisition or merger was Pfizer-Warner-Lambert for $90 billion in 2000. In 2022, Bristol-Myers Squibb merged with Celgene for an estimated $74 billion. Both acquisitions would be in the top 5 of the world's largest acquisitions.

Fortunately, Novo Nordisk (NVO) is more of a proponent of complementary, buy-on acquisitions than transformative ones. Here are some of its major deals from the past 10 years:

Novo Nordisk (NVO) acquisitions in chronological order

  1. 🔍 Ziylo (2018)
    • Value: ~800 million USD
    • Area: Glucose-sensitive insulin development
    • Target: Insulin development with glucose-sensitive technology that more accurately controls blood sugar levels in type 1 and type 2 diabetes
  2. 💊 Emisphere Technologies (2020)
    • Value: ~1.35–1.8 billion USD
    • Area: Development of oral dosage forms
    • Target: Development of oral GLP-1 receptor agonists, such as Rybelsus
  3. 🔬 Dicerna Pharmaceuticals (2021)
    • Value: ~3.3 billion USD
    • Area: RNA interference (RNAi)-based therapies
    • Target: Integrating new technology platforms in the treatment of diabetes and obesity
  4. 🩸 Forma Therapeutics (2022)
    • Value: ~1.1 billion USD
    • Area: Rare blood disorders, especially sickle cell anemia
    • Target: Expanding research and development related to rare blood diseases
  5. 📱 Biocorp Production SA (2023)
    • Value: ~154 million euros
    • Area: Bluetooth-based devices such as Mallya
    • Target: Monitoring medication administration and collecting patient data
  6. 🧬 Inversago Pharma (2023)
    • Value: ~1 billion USD
    • Area: Innovative treatments for obesity
    • Target: Research into ghrelin receptor antagonists, which offer a new approach to treating obesity
  7. 🔬 Embark Biotech (2023)
    • Value: ~1.5 billion USD
    • Area: Research and development for the treatment of obesity and metabolic diseases
    • Target: Innovative treatments and new drug developments in the metabolic diseases market
  8. 🏭 Catalent Manufacturing Sites (2024)
    • Value: ~11 billion USD
    • Area: Sterile filling and injection pen manufacturing
    • Target: Meeting the demand for Wegovy and Ozempic

In fact, Novo Nordisk (NVO) has made significantly more acquisitions than this, as it has purchased countless pharmaceutical manufacturing plants over the years or invested in capacity expansion. It is very important that Novo Nordisk (NVO) owns its own manufacturing capacity, it very rarely has to outsource its activities, but it does enter into cooperations with other companies. In many cases, the market expands faster than the company can expand capacity, which is typical of acquisitions. However, it is also clear that, with the exception of the Catalent acquisition, which was a demand-filling operation, none of them were significant compared to the size of Novo Nordisk (NVO).

💡Based on the above, it can be stated that growth comes more from internal research and development than from acquisitions, which is something that most oncology pharmaceutical manufacturers cannot say about themselves. Based on this, I judged the company's capital allocation to be particularly good, but the timing of acquisitions was often poor.

🤵Novo Nordisk (NVO) management🤵

In this section, I examine who runs the company and how. What is the bonus system, how much risk – skin in the game – do the managers take on while running the company? Is there a family connection, or perhaps a special “heritage” factor?

Novo Nordisk (NVO) is governed by a foundation, the Novo Nordisk Foundation, which owns 77% of the voting rights and 28% of the shares. It is somewhat similar to companies owned by founding families, but there are significant differences. Since the foundation’s board of trustees can determine the composition of the management, they can easily remove management members from their positions, including the CEO. This is exactly what happened in May 2025, when Lars Fruergaard Jørgensen was removed and replaced by Maziar “Mike” Doustdar, who took over the CEO position in August 2025, just as this article was being written. Not only the CEO, but also the former CSO, Marcus Schindler, fell victim to the mistakes made.

🧑‍💼 Novo Nordisk (NVO) CEO change

  • Maziar “Mike” Doustdar: assumed the position of CEO on August 7thtion. Doustdar has been with Novo Nordisk (NVO) since 1992. He is the first non-Danish CEO in the company's 102-year history. His compensation is not yet known. He owns DKK 52.9 million worth of Novo Nordisk (NVO) shares.
  • Lars Fruergaard Jorgensen: On May 16, he left the position of CEO by mutual consent. Jørgensen has been with the company since 1991 and has led Novo Nordisk since 2017. Under his leadership, the company reached its highest market value. Two years ago, his base salary was $1.8 million, short-term incentives were $1.9 million, and long-term incentives were $5.2 million. That's a total of $9 million (DKK 57 million), which is extremely low for a company of this size. I assume Maziar Doustdar will earn a similar amount. He owns DKK 405 million worth of Novo Nordisk (NVO) shares.

👥 Leadership changes

  • Thilde Hummel Bøgebjerg, Executive Vice President: On April 3, he was promoted to EVP and took over the leadership of Quality, IT & Environmental Affairs. Previously, he worked in Product Supply, Emerging Technologies.
  • Marcus Schindler, CSO: He has been Chief Scientific Officer (CSO) since 2021, retiring in August 2025. The new R&D unit, created by merging the Research & Early Development and Development areas, is headed by Martin Holst Lange, former Executive Vice President Development, and has become the company's new CSO.

🧾 Board changes

  • Lars Rebien Sorensen, Chairman of the Novo Nordisk Foundation, joined the company's board in May 2025, initially as an observer. He is scheduled to become a full member in 2026 and will be elected for a 2-3 year term. Sørensen led Novo Nordisk from 2000 to 2016 and can contribute his experience to the company's future strategy.

📌Note: Since the company is a foundation-controlled company, I don't think it's necessary for the management to own a large share package in the company. However, Karsten Munk Knudsen, CFO and Executive Vice President, has a share package of DKK 148 million, which is worth mentioning.

What was the fault of the management that made them leave, despite the fact that, for example, under Lars Fruergaard Jørgensen's leadership, the share price tripled, and then fell by a third? They made countless strategic mistakes, let's look at them one by one:

1. 💥Increasing market competition and price pressure

  • In the diabetes and obesity treatment market, Novo Nordisk has long dominated the GLP-1 receptor agonist market, but competitors have become increasingly powerful. Eli Lilly, for example, has increased its market share with its drug Mounjaro, which serves the same purpose as Novo Nordisk's drugs such as Ozempic and Wegovy.

In this regard, my observation is that when it became clear that GLP-1 technology, originally invented to treat diabetes, resulted in weight loss, Novo Nordisk (NVO) still had an advantage over other market players. What is surprising is that Ozempic was already on the market in 2017!, although not as a consumer drug, but as a diabetes drug. In the first year, Novo Nordisk (NVO) made 10 billion USD in revenue from the drug, 70% of which came from the United States. This was followed in 2021 by Wegovy, which was a drug with the active ingredient semaglutide that was already launched specifically for consumer purposes. In 2022, semaglutide was added to the FDA's shortage list, which triggered the approval of mixed biosimilar copies to replace drugs under patent protection.

Management got a little carried away by the story, and by the time they realized it, Eli Lilly (LLY) had already developed potent products to compete with Novo Nordisk's (NVO) consumer products, putting price pressure on the company. In addition, LLY is already testing more advanced drugs in the next round, such as Orforglipron, a tablet version of Zepbound, although the Phase III trial was not a great success. Eli Lilly (LLY) successfully lowered prices by not filling the consumer drugs into the usual "insulin pen", which is an expensive solution, but by breaking down the dose into an injection and an ampoule, which made production cheaper. Although oral intake is much preferred by people, for now, injection-based solutions seem to allow for more effective weight loss.

number of consumer drugs prescribed per month in the USA
source: The New York Times, number of consumer prescription drugs prescribed monthly in the USA

📌Note: This issue is closely related to point 2, as not only has LLY attacked the market, but the FDA has also authorized the temporary marketing of biosimilar drugs, which are typically 20-40% cheaper than the patented drugs. Novo Nordisk (NVO) still claims that about 1 million people in the US market use these drugs and the time frame for their final disappearance is uncertain. How do biosimilar manufacturers avoid regulation? With the aforementioned 503B regulation, which is a legally nebulous loophole in the law. Citing this, competitors are mixing molecules whose effects are very similar to Novo Nordisk's (NVO) products. In July 2025 alone, Novo filed 14 lawsuits against companies that distribute copies in order to remove these biosimilars from the market, mainly targeting their drug Wegovy.

The good news is that these 1 million users will have to go somewhere, and Elli Lilly (LLY) and Novo Nordsik (NVO) will almost certainly be the winners, which could also trigger a year-end catalysis.

2. 🛑Meeting production capacity and global demand

  • Novo Nordisk failed to adequately address its manufacturing capacity issues. Demand for Ozempic and Wegovy grew to such an extent that the company was unable to keep up with the increase in demand, leading to drug shortages and logistical difficulties.

📌Note: Novo Nordik (NVO) grossly underestimated the growth opportunities in the market and were unable to produce enough Ozempic and Wegovy, as they did not have the physical manufacturing and logistics capacity, even at the end of 2022, especially in the USA, where 57% of their revenues come from. This is related to the acquisition of Catalent Manufacturing Sites in 2024, which had to wait almost two years, while the FDA allowed the competition to enter the market at the end of 2023. It's not particularly difficult to guess that Novo Nordisk (NVO) has actually squandered its big opportunity from its leading position and can now run after its own market. Fortunately, the above problem no longer exists, but now they have to contend with countless aspirants.

3. 🎯Overfocusing on one segment

  • Novo Nordisk has long been overly focused on treating diabetes and obesity, while its rare disease portfolio has lagged behind potential new revenue streams.

📌Note: To put the above sentence into concrete terms, roughly 6% of revenue comes from hemophilia drugs in the rare disease segment, such as NovoSeven or Refacto, where it has to compete with big guns like Takeda, Baxter, Pfizer or Roche. It will probably have a much smaller advantage in this market than in anti-obesity drugs, and it wouldn't be surprising if the company spun this off as well.

4. 🚨Overreliance on GLP-1 receptor agonists

  • Although GLP-1 receptor agonists have been extremely successful, the company has built its growth almost entirely on one drug family, a risk that could backfire in the face of future competition and market changes.

📌Note: To put things into perspective, Eli Lilly's (LLY) tirzepatide-based Mounjaro, dulaglutide-based Trulicity, and the next-generation Retatrutide-based Retatrutide look very promising. Almost every day we read a press release about the effectiveness of Mounjaro, and Novo Nordisk (NVO) seems to be losing market share to Eli Lilly.

Based on the above, it is not a question of whether management made a mistake, the question is how quickly the company can climb out of the hole. I tried to find out what the new CEO, Maziar “Mike” Doustdar, would expect. It’s clear that he knows Novo Nordisk inside and out, having worked for the company since 1992 and held a leadership position since 2007, and is also the director of Orion in addition to his work at Novo. Let’s give him time and see if he can capitalize on the trends.

😀5. More strange Novo Nordisk management moves

The above are also big mistakes, but there were one or two interesting actions by management, which can be interpreted in several ways:

  • Hims and Hers Health Agreement: Novo Nordisk announced that it would sell the consumer product Wegovy through H&H Health stores, which lasted for about 2 months. Both parties blamed the other, but it is likely that H&H favored biosimilars over Novo Nordisk (NVO) products and offered them to its customers, i.e. abused its position.
  • Loss of Canadian trademark: One of the most ridiculous news I've ever heard from a company of this caliber is that Novo Nordisk (NVO) will lose its patent on its injectable semaglutide drugs, Wegovy and Ozempic, in 2026 because it forgot to pay the trademark fee in 2018...and 2019. Do you know how much that is? 250 CAD, plus another 200 CAD, which would have been the late fee for the next 1 year, since that's the grace period. So we're talking about 327 USD.

📌Opinion: When I read the Canadian trademark news, I first thought it was fake. What I can imagine is that they deliberately did not renew the trademark so that they could enter the market with their own, cheaper biosimilar drugs under a different brand name and undercut the seemingly more effective Eli Lilly (LLY) products, since the trademark for semaglutide does not protect against them anyway. They see Canada as a kind of testing ground. But, the truth has not been found out, so consider this as speculation.

🤑Novo Nordisk (NVO) executive compensation

I consider the issue of executive compensation to be quite important in the companies analyzed, since when the interests of management conflict with those of the company, short-term goals usually come to the fore, over the long-term goals of the owners. Novo Nordisk (NVO) categorizes its benefits into the following categories:

  • Basic salary: Managers receive their monthly salary, housing and other benefits such as a car, telephone, etc. as fixed costs. The amount of the increase is adjusted to a benchmark, see below.
  • Short-term bonuses and benefits (STPI): It includes short-term incentives within a year, based on individual and corporate objectives, which are tied to the achievement of revenue, operating profit, non-financial indicators and personal goals. Last year, the management board awarded 75% of the maximum payout. The CEO's individual performance was rated at 50% of the maximum payout, which amounted to a little more than eight months of base salary. The CFO's individual performance was rated at 67%, which also amounted to a little more than eight months of base salary.
  • Long-term incentives (LTI): Stock options and stock awards help ensure that management members remain committed to the company's long-term success. These compensation elements are generally designed to increase the value of the company and take into account shareholder interests. In this case, management has set a maximum payout of 89%.

Source: Renumeration report 2024

Novo Nordisk (NVO) quarterly report, management compensation
source: Novo Nordisk (NVO) quarterly report, management remuneration

Interestingly, the benchmark for management performance is the Nordic 14, which is a group of 14 Nordic companies that are similar in size to Novo Nordisk. They also take into account the 8 largest European pharmaceutical companies, which I think provides the more authoritative basis for comparison of the two. These are: AstraZeneca, Bayer, GlaxoSmithKline, Merck KGaA, Novartis, Roche, Sanofi and UCB. But how much did the two top executives earn based on these? This much:

Novo Nordisk (NVO) quarterly report, management compensation quantified
source: Novo Nordisk (NVO) quarterly report, management remuneration quantified

The above is quite convincing in that the management is not overpaid and their remuneration is aligned with the interests of the company, and as can be seen, the foundation is able to remove unsuitable people if they make strategic mistakes. Finally, an interesting thing that I usually check: is there significant stock dilution through option compensation? There are some companies, such as Intuit (INUT) and Veeva System (VEEV), that have outrageously high stock option compensation, but Adobe, for example, cannot be modest either. I have analyzed the latter, which you can access here: Adobe Inc. Stock Analysis (NYSE: ADBE)

Novo Nordisk (NVO) stock-based compensation
source: Fiscal.ai, Novo Nordisk (NVO) stock-based compensation

In the case of Novo Nordisk (NVO), there is practically none, the annual rate of 0.8% is extremely low. In the case of Veeva Systems, it is 16%, but in the case of Adobe, the value is also around 8%.

🆚Competitors: Novo Nordisk (NVO) opponents🆚

In this section, I examine who the competitors of the analyzed company are, what is their market position, whether they are in a subordinate, secondary or superior role. What is their market share and what is their specialty? Are they losing or gaining market share to their competitors?

Novo Nordisk (NVO) was an insulin manufacturer for about 80 years, making the vast majority of its revenue from diabetes products. A sideline of this was the GLP-1 drug industry, and apart from that, it has a not-so-significant product line covering rare diseases like hemophilia. But we can take that out of the equation, because I don't think Novo Nordisk (NVO) is a factor in this market. I wouldn't even consider drugs that are good for Alzheimer's or fatty liver disease, or NASH, which are in the experimental stage, because it's incalculable what results the clinical trials will bring.

What remains? The following:

  • insulin preparations market: 17% of revenue
  • diabetes market: 22% of revenue, $40 billion market
  • GLP-1-based consumer drugs: 50% of revenue, a $200 billion market within five years, and growing exponentially

Since Novo Nordisk's revenue comes mainly from these segments, the rest is negligible. Even more crudely, if I add up the revenue of Ozempic, Rybelsus and Wegovy, in other words semaglutide and relaglutide-based drugs, last year, I get 201 billion DKK, which is ~69% of total revenue. So instead of considering a dozen drugmakers, all of whom produce drugs for rare diseases, the real challenger is Eli Lilly (LLY) and in a sense the third player in the insulin market is Sanofi (SNY) (Sanofi stock page, Eli Lilly stock page).

Morningstar analysis, Novo Nordisk (NVO) opponents
source: Morningstar analysis, Novo Nordisk (NVO) opponents

In the image above you can see the competitors included in the Morningstar analysis. I would like to mention Pfizer (PFE) for a moment. This company developed two GLP-1 agonists, danuglipron and lotiglipron, but they failed due to liver toxicity and did not become a product.

AstraZeneca PLC (AZN) has a completely wrong market cap 😀, in reality it is 170 billion GBP, or 229 billion USD. AZN has revenue of 56.5 billion USD, which is comparable to the revenue of Novo Nordisk (NVO). Farxiga is a type 2 diabetes drug with revenue of 7.7 billion USD (49.4 billion DKK), which is a significant item, and it has grown by 30% in one year. And, that's about it, they have some early-stage consumer products, but there is no data on their effectiveness yet, so you can take AZN out of the top four.

Sanofi (SNY) is a bit more interesting, in their portfolio you have to look for the real blockbusters among immunological drugs, such as Dupixent. They are also strong in rare diseases, here they are truly opponents of Novo Nordisk (NVO), but since these are not the big names at Novo, I will not deal with them for now. Lantus and Toujeo are diabetes drugs and generated EUR 2.8 billion last year, which is ~21 billion DKK, which is a tenth of the similar revenues of Novo Nordisk (NVO), Soliqua generated EUR 227 million, which is not significant. They have experimental drugs like Adlyxin, which is a GLP-1 receptor agonist, but it's not generating significant revenue. They failed with Lyxumia, which had to be pulled from the market.

As for Eli Lilly (LLY), its revenue is $45 billion, which is similar to that of Novo Nordisk (NVO), and it has a number of products that directly compete with Novo Nordisk (NVO) products. Anyone who follows the business press can come across a new piece of news every day that informs the public about the current miracle consumer drug. You can find the numbers below here: Annual report 2024:

💉 Insulin and other diabetes medications

  • Humalog® (insulin lispro): A rapid-acting insulin used to treat type 2 diabetes.
    • Revenue: 2.3 billion USD (1.63 billion USD last year), ~14.75 billion DKK
  • Humulin® (insulin NPH and insulin suspension): Intermediate- and long-acting insulins used to treat type 2 diabetes.
    • Revenue: 0.9 billion USD (0.85 billion USD last year), ~5.8 billion DKK
  • Basaglar® (insulin glargine): Long-acting insulin used to treat type 2 diabetes.
    • Revenue: 0.67 billion USD (0.78 billion USD last year), ~4.3 billion DKK
  • Trulicity® (dulaglutide): GLP-1 receptor agonist, for once-weekly administration.
    • Revenue: 5.25 billion USD (7.13 billion USD last year), ~33 billion DKK
  • Jardiance® (empagliflozin): SGLT2 inhibitor, which is used to treat type 2 diabetes.
    • Revenue: 3.34 billion USD (2.7 billion USD last year), ~21 billion DKK

🟢 GLP-1 based drugs

  • Mounjaro® (tirzepatide): GLP-1 and GIP receptor dual agonist used to treat type 2 diabetes, a direct competitor to Wegovy and Ozempic.
    • Revenue: ~11.5 billion USD (5.1 billion USD last year), ~74 billion DKK
  • Zepbound® (tirzepatide): It contains the same active ingredient as Mounjaro, but has different indications, and is a direct competitor to Rybelsus.
    • Revenue: 4.9 billion USD, (3.8 billion USD last year), ~31 billion DKK
  • Orforglipron: An oral GLP-1 receptor agonist being developed to aid weight loss. The drug was in large-scale Phase III clinical trials at the end of 2024.

These drugs are direct competitors to Novo's products and their total revenue is similar to that of these types of products. Eli Lilly (LLY) and Novo Nordisk (NVO) have DKK 184 billion in revenue from these segments, so the two companies are neck and neck. This has been the case for the past hundred years, which is not surprising, but Eli Lilly seems to be a more diversified company, since I haven't listed nearly all of their products. If I had to name three, I would highlight the chemotherapy oncology drugs Verzenio and Jaypirca, and Taltz, which is a drug for autoimmune diseases.

🆚Are Novo Nordisk (NVO) or Eli Lilly (LLY) products better?

The press loves to write every day about which company is leading and by what percentage the control group managed to lose weight.

Novo Nordisk (NVO) GLP-1-based drugs:

  1. Ozempic® (semaglutide) 💉
    • Form: Injection (once weekly dosing)
    • Effectiveness: 🌟 ~15% weight loss, This was confirmed by the five-year SUSTAIN and Seino studies involving 17000 people. These were the largest studies in Novo Nordisk's (NVO) history.
    • Features: It can also be used to treat weight loss and type 2 diabetes.
    • Main goal: Diabetes + weight loss
  2. Wegovy® (semaglutide) 💉
    • Form: Injection (once weekly dosing)
    • Effectiveness: 🌟 ~15-20% weight loss
    • Features: It is mainly used to treat obesity, but can also be used for type 2 diabetes. It is also being tested for fatty liver disease as part of the ESSENCE trial.
    • Main goal: Weight loss
  3. Rybelsus® (semaglutide) 💊
    • Form: Tablet (once daily dose, 25 mg)
    • Effectiveness: 🌟 OASIS-4 study shows 13.9% weight loss
    • Features: The oral version, however, is not as effective as the injectable versions. NVO expects FDA approval by the end of 2025.
    • Main goal: Diabetes + mild weight loss
  4. CagriSema® (combination of semaglutide and cagrilintide amylin analogue)💉
    • Form: Injection (once weekly dosing)
    • Effectiveness: 🌟 23.7% weight loss in the longer REDEFINE-1 and 15.7% weight loss in the shorter REDEFINE-2 clinical trials
    • Features: It is mainly used to treat obesity, but can also be used for type 2 diabetes.
    • Main goal: Weight loss, but not yet on the market.

📌Note: tirzepatide, produced by Eli Lilly (LLY), is a dual agonist, meaning it affects not only the GLP-1 but also the GIP receptor, unlike semaglutide, which only stimulates the GLP-1 gut hormone receptor. This is probably why tirzepatide preparations are more effective than semaglutide drugs. However, CagriSema is also a dual agonist, only here semaglutide is combined with cagrilintide, which is why it is more effective than the previous drugs. They are also developing a dual agonist called amycretin, codenamed NN 9487, but it is still in clinical phase I and not much is known about it. The initial results are good, with a 22% weight loss achieved in three quarters of a year.

Novo Nordisk (NVO) revenue per product, in USD
source: Fiscal.ai, Novo Nordisk (NVO) revenue per product, in USD

Regarding Rybelsus, it is worth mentioning that they are experimenting with a 50 mg, higher dose variant, OASIS-1, and that the 4% weight loss achieved in the OSIS 13.9 test was achieved with 25 mg of the active ingredient semaglutide: description hereIn contrast, in the case of Oroforglipron, the ATTAIN-1 test, which lasted almost a year and a half, achieved a result of 11.5%, also correcting the results for the effect of placebo drugs, but with 36 mg of active ingredient, description hereSo the press tends to mix up the numbers, so look into each one individually if you want to get relevant results. Furthermore, it does not follow from the above how well the patients tolerated each one, so take everything with a grain of salt.

Eli Lilly's GLP-1 (LLY)-based drugs:

  1. Mounjaro® (tirzepatide) 💉
    • Form: Injection (once weekly dosing)
    • Effectiveness: 🌟 20-25% weight loss
    • Features: Stronger weight loss effect with combined activation of GLP-1 and GIP receptors.
    • Main goal: Weight loss + diabetes treatment
  2. Zepbound® (tirzepatide) 💉
    • Form: Injection (once weekly dosing)
    • Effectiveness: 🌟 20-25% weight loss, based on the SURMOUNT-5 study.
    • Features: Mounjaro contains a similar active ingredient, but is mainly used to treat diabetes.
    • Main goal: Diabetes + mild weight loss
  3. Orforglipron 💊
    • Form: Tablet (once daily dose)
    • Efficiency: 🌟 Currently undergoing clinical testing, but oral forms are less effective than injections.
    • Main goal: Weight loss

📌Note: In fact, the above drugs should be classified into two groups: simple GLP-1 stimulating drugs and dual agonists, which are also called second-generation diabetes and weight loss drugs, such as tirzepatide. In principle, there is also a triple agonist drug, retatrutide, in the experimental phase, which stimulates the glucagon receptor in addition to the GLP-1 and GIP receptors. If you are interested in more information, search for the TRIUMPH-6 study, it is currently running for two and a half years, and results will be available in the first quarter of 2026.

Eli Lilly (LLY) revenue per product, in USD
source: Fiscal.ai, Eli Lilly (LLY) revenue per product, in USD

🏆 Direct competition and expected efficiency:

  • Mounjaro (Eli Lilly) 🆚 wegovy (Novo Nordisk) 💉
    • Mounjaro shows better effectiveness, 🌟 20-25% weight loss, while Wegovy 15-20%.
    • Mounjaro is a newer drug that targets both GLP-1 and GIP receptors, thus working with a more effective mechanism of action.
  • Rybelsus (Novo Nordisk) 🆚 Orforglipron (Eli Lilly) 💊
    • Oral forms from both companies are 🌟 less effective than injections, but offer convenience benefits.

And then some news about the new generation of drugs. LLY's Orforglipron produced 3100-13% weight loss in a late phase III, large-sample trial involving 15 people over a period of one and a half years, which is lower than the 15-20% effectiveness of the Wegovy injection and, theoretically, also than oral semaglutide-based drugs. This is important because patients are reluctant to inject themselves, many are averse to needles, so they prefer oral tablets, the market for which is estimated to be worth 95 billion USD within a decade. Eli Lilly shares immediately fell 12% and Novo Nordisk rose about 8%. This is a complete overreaction, but the market is mainly dominated by such sentiment elements. The same is true for market size predictions, I've read everything between 100-200 billion USD, and these are studies worth thousands of USD, not just tabloid news.

🤔But why are specific weight loss percentages so important? For one thing, there's a kind of hype around it. On the other hand, 25% weight loss is almost in the category of bariatric surgeries, such as gastric bypass, which typically result in 30% weight loss.
source: Torghatten Capital, Substack, side effects of some consumer drugs with increasing dosage

Almost all GLP-1 drugs have similar side effects, nausea, vomiting and diarrhea, but I had a friend who reported aggression after taking one of the consumer drugs. In fact, some press reports have already said that Ozempic and Wegovy can cause serious eye disease in one out of 10000 cases. The important thing is how much. Returning to the above Orforglipron study, 10% of the test subjects stopped taking the drug, which is no wonder, since based on the tests run with 36 mg of the active ingredient, 14% of the subjects vomited and 26% had diarrhea, so more than a quarter of the patients.

❗It's no use making a drug seem more effective if patients won't take it later due to side effects, which greatly distorts the overall picture.

🫰🏼Formulary and list of supported medications

Another thing that has a significant impact on the prices of both companies is their inclusion on the US healthcare system's list of subsidized drugs, the formulary. This list is part of Medicare Part D, which essentially provides medicines to residents over the age of 65. Since Novo Nordisk (NVO) generates 57% of its consumer drug revenues in the US market, while Eli Lilly (LLY) generates 70% of its consumer drug revenues, this is a very significant event. In such cases, insurers have to fight with drug manufacturers over the price, which typically results in significant discounts and rebates.

In return, the drug can reach many more patients because the state will cover a significant portion of the cost of the drugs, which would otherwise only be affordable to a small percentage of the population. Obviously, the insurer's goal is to obtain the most effective medicine at the lowest possible price, as this is financially beneficial for them. Medicare Part D insurers often compete with drug manufacturers for the best price and availability. Drug manufacturers therefore offer insurers deals to give them an advantage on the formulary, potentially over their competitors. The formulary is updated annually, meaning options can be renegotiated each year. In the February 2025 round, Wegovy, Ozempic and Rybelsus were added to this list, and the negotiated price will take effect from 2026. This is likely to reduce Novo Nordisk's (NVO) profits on the said drugs.

☝🏼Based on the above, the Eli Lilly (LLY) vs. Novo Nordisk (NVO) game is far from over, and the activities of the two companies must be continuously monitored. However, the current situation may have developed because Novo Nordisk (NVO) management made significant operational errors and allowed competitors to catch up.

⚡What risks does Novo Nordisk (NVO) run?⚡

In this section, I examine all the risks that could affect the company's long-term future. Currency, regulatory, market disruption, and so on.

Novo Nordisk (NVO) has a very fair annual report that discusses risks and places them on a heat map. Novo Nordisk (NVO) identifies a total of 6 risks, and I would like to add a few thoughts to these:

Novo Nordisk (NVO) 2024 Annual Report, Company Risks
source: Novo Nordisk (NVO) 2024 annual report, company risks

🧬Research risks

  • 💊Future drug developments: The company is focusing on developing CagriSema and other combination therapies, which combine multiple molecules at once, but their success is not guaranteed. If future developments do not achieve the desired results, it could seriously impact the company's growth, especially with Eli Lilly constantly in hot pursuit.
  • 🏛️Regulatory barriers for future products: Regulatory approval for new drugs may be delayed, or the drugs may not meet the required efficacy and safety criteria, which could hinder growth. Another important factor is the level of Medicare prices negotiated in the US health insurance system, which is always lower than what drug manufacturers would like. In return, lower prices mean higher volumes, which compensates for lower margins.

📌Opinion: I generally like a company to have a more diversified product range, except for specialists like Novo Nordisk (NVO). The company has been developing insulin and diabetes treatment products for over a hundred years, and they've gotten this far because they specialize in this. In 2000, they spun off the development of industrial enzymes under the name Novozymes in order to focus more on their core business. Novozymes is still owned by the Novo Foundation, but it no longer has anything to do with Novo Nordisk (NVO). We are seeing more and more spin-offs of this kind in the pharmaceutical industry, which narrow the scope of research and the number of experimental drugs in the pipeline, but do not divert capital or attention from the core tasks. For me, the big question is whether Novo Nordisk (NVO) really needs a rare disease arm.

🏭Manufacturing and supply chain issues

  • 📦Production capacity and supply: As demand continues to grow, expanding manufacturing capacity is key, but manufacturing issues and shipping disruptions (e.g. global supply chain issues due to the COVID-19 pandemic) can impact drug availability and the company may not be able to meet demand.
  • 🇺🇸Earlier expiration of non-US patents: Generic versions of semaglutide and other drugs are expected to be available earlier in other countries, such as Canada and China, than in the U.S. Generic competition could severely reduce revenues and profits in these markets.

📌Opinion: If there is one fault of the previous management, it is the slow ramp-up of production capacities, but fortunately this flaw has been largely eliminated by the company by now, including through the acquisition of Catalent and the capital pumped into new production units. Although some of these will only start production in 2027. As you can see in the picture below, Catalent also has production capacity in the USA, from where Novo collects 57% of its revenues, so it was a big mistake not to ramp up production earlier.

Novo Nordisk (NVO) supply chain
source: Medium, Novo Nordisk (NVO) supply chain

The semaglutide trademarks expire in the US in 2032, which is still a good six years away, but biosimilars are already causing problems on the US market, as I wrote earlier. Since semaglutide was registered in 2007!, the patent protection expires in 2027. The company's drugs will probably not enjoy as much patent protection in other markets, with Canada and China regularly coming up, where the patents expire in 2026. Only molecules and manufacturing processes can be protected in the pharmaceutical industry, which is quite specific, which is why Eli Lilly is able to register drugs with similar effects using other molecules. The solution to this is continuous research and development and innovations such as tablet delivery instead of injections, but I don't think Novo Nordisk (NVO) is bad at these, in fact, they have been proving the opposite for a century. They have always been in the Top 2, or Top 5 before the merger, so I'm not too worried about it.

🏆Competition and market loss

  • 🚀Eli Lilly and Mounjaro: Tirzepatide (Mounjaro) represents significant competition for semaglutide products. Tirzepatide's combined GLP-1 and GIP receptor agonist activity makes it one of Novo Nordisk's strongest competitors, particularly in the treatment of obesity. If Mounjaro continues to outperform, it could reduce the market share of Wegovy and Ozempic.
  • 🥈Biosimilars: In the US, a weekly dose of Wegovy costs $499, while the mixed drugs cost roughly $200, which is a huge difference in price.

📌Opinion: I feel it is a very real risk that Eli Lilly (LLY) could gain a competitive advantage over Novo Nordisk (NVO) products, temporarily. Given that these two companies have been fighting a duopolistic battle for 100 years, I don't think one will be able to completely eliminate the other in the long run. As I wrote in the previous point, continuous innovation is the best way to move forward. The big question is who will ultimately be able to capture what share of this rapidly expanding market, but that won't be clear for years.

As for biosimilars, they exploit the 503B legal loophole and there are already many such products on the market. Although their effect is not entirely identical to the mechanism of action of Novo Nordisk's (NVO) drugs, they are also consumed and are 60% cheaper than Novo's own products. But this is also true for Eli Lilly's drugs, so it is in the interest of both companies to eliminate such competitors with fire and iron, or at least with legal means. However, both NVO and LLY are able to produce cheaper biosimilar drugs if they want to undercut the other in price competition in certain markets.

🛡️IT security risks

  • 💻Hacker attacks: There is no question that hacker attacks and cybersecurity are a very current threat. Pharmaceutical manufacturers keep very valuable secrets online, most of their know-how and research and development are stored electronically, there is no other way to process the results of years of testing, and more and more drug research is being conducted with the help of AI modeling. For example, a ransomware that encrypts all data could cause a big headache for the company, but there would certainly be a competitor who would be happy to buy the stolen research data

📌Opinion: I recently read about Novo Nordisk (NVO) launching an AI project focused on drug discovery in collaboration with Nvidia (NVDA), which aims to accelerate research activities. Due to the accelerating digitalization of companies, I believe that IT risks will not decrease in the near future, but rather increase.

⚖️Regulatory and political risks

  • ⚖️Medicare negotiations and prices: Under the Inflation Reduction Act, Medicare can negotiate prices with drug manufacturers, and if drug prices decrease significantly, it could affect the company's revenues. Medicare prices below drug prices and political risks can change, which could threaten the predictability of future revenues.
  • 📜Regulatory challenges: The strict regulation of medicines and the changing regulatory environment may pose risks for the company, especially if active ingredients such as semaglutide or tirzepatide are subject to new regulations or licensing requirements. The latest news in this regard is that semaglutide-based preparations, i.e. Ozempic, Wegovy and Rybelsus, have been included in Medicare Part D subsidized drugs from 2026, while Eli Lilly's (LLY) tirzepatide, i.e. Mounjaro and Zepbound, have not.

📌Opinion: Trump's latest brainchild could be a 250% tariff on pharmaceutical manufacturers, but there has been talk of 150%. Novo Nordisk (NVO) as a Danish manufacturer would obviously be affected by such a measure, Eli Lilly (LLY) much less so. But almost everyone imposes counter-tariffs at this time. What is very bad about this whole situation is that it is impossible to know whether these fall into the category of political pressure or whether they will actually be implemented.

💵Foreign exchange risks

  • 🆚DKK vs USD: Like any company that generates revenue in more than just USD, Danish Novo Nordisk (NVO) is also affected by currency risks. Novo Nordisk generates 57% of its revenue in the US, i.e. in dollars, but because it sells its products all over the world, countless other currencies also affect its results, which are then reported in Danish kroner.

📌Opinion: I think this is a hugely overestimated risk, and one that should be mentioned by every company. A good example of this is Philip Morris (PM), which has been working in FX headwinds for years, yet its share price has risen by ~116% in the past five years, which is equivalent to a 16.7% annual return, not including dividends. The Danish krone has lost about 20% of its value against the USD in the past two decades, which is not much at all. Of course, countless other currencies should be included in the formula, but US sales are the most important factor in revenue development.

USD/DKK fluctuations
source: own, USD/DKK fluctuations

🎯Pharmaceutical industry lawsuits

  • Patent disputes: Typically, such legal disputes arise in connection with generic drugs.
  • Product liability lawsuits: lawsuits over drug side effects. If Novo Nordisk's drugs, such as Ozempic or Rybelsus, cause serious side effects in patients, the company could be sued for product liability. You already know that in some very rare cases, semaglutide can cause serious eye disease. If you open the package insert of any medicine you have at home, it will be full of similar warnings, so this is not an isolated case, but there is a risk.
  • Antitrust and competition law litigation: These are always antitrust lawsuits and are typically filed against the state. Given that this market has been essentially dominated by two companies since the 1920s, this could be a real threat.
  • Consumer claims and class action lawsuits: better put: mass lawsuits. It's a typical Hollywood movie theme that the evil pharmaceutical/chemical manufacturer is sued by citizens, but this is a completely real scenario that has happened many times in history.
  • Regulatory lawsuits and government investigations: It may not necessarily take the form of a lawsuit, but also in the form of a ban, for example, the American FDA does not approve the distribution of a drug or withdraws it from the market. More than one drug has failed as a result of FDA investigation.

📌Opinion: Most people understand consumer lawsuits by pharmaceutical lawsuits, and rightly so. These are high-profile, public-society cases that can lead to mass boycotts of certain products.

A good example of such lawsuits:

  • Purdue Pharma v. United States: OxyContin painkiller lawsuit, ~10 billion USD in damages, Purdue Pharma files for bankruptcy
  • Johnson&Johnson vs. certain US states: asbestos-containing dust, ~4.7 billion USD in damages
  • Merck vs. United States: Vioxx painkiller lawsuit, ~5 billion USD in damages
  • Eli Lilly vs. FDA: Zyprexa lawsuit, where the drug was promoted despite FDA not approving its introduction, ~$1.4 billion in damages

They have also started to complain about very serious side effects in consumer drugs, but the point is that there is no experience with the effects of GLP-1 agonist drugs that have been taken for decades on the human body. Some of the more serious ones mentioned above: pancreatitis, gallbladder problems that may require surgery, and gastroparesis, which is paralysis of the stomach, the development of C-cell thyroid tumors, at least based on animal studies, all of which could be unexpected, black swan-like events.

💡To sum up, the pharmaceutical industry is typically a high-risk, high-reward industry, where you can earn up to 100-200 billion USD with a blockbuster drug, but in return you have to face a lot of difficult-to-predict risks. Which drugs in the pipeline will be successful and which will not, lawsuits due to side effects, regulatory risks, the emergence of generic drugs, price competition with insurance companies, government agencies, and I could go on and on. This is not a sector I recommend for risk-averse investors.

I made a self-check list that confirms the thesis about the company:

  1. low or zero debt: YES/PARTLY/NO
  2. significant economic advantage that can be protected in the long term: YES/PARTLY/NO
  3. excellent management: YES/PART/NOT
  4. excellent indicators, significant owner value creation: YES/PARTLY/NO
  5. The majority of the total return comes from reinvesting the cash generated, not from dividends: YES/PARTLY/NO
  6. appropriate share valuation: YES/PARTLY/NO

I would add to the above assessment that we don't really know what the new management will be like, because the CEO has just been appointed. Fortunately, this situation has changed, so we definitely have to wait and see. I think the debt level is very good, even if it's not zero, especially compared to competitors. I think Novo Nordisk's (NVO) broad competitive advantage is unbroken, and the current volatile situation has occurred several times in history, with the two companies having been fighting each other for roughly 100 years. There are so many sentimental factors in the market, with panicking or overjoyed investors driving the price up and down. I suggest you focus on the facts: Novo Nordisk (NVO) is still a damn good company, trading at a depressed valuation and operating in a market that could expand very quickly, even a hundredfold.

👛Novo Nordisk (NVO) valuation👛

In this section, I will examine the company's current valuation compared to historical values ​​and consensus fair values.

Rating metrics

In the two rows below you can see valuation metrics. The first row shows the current valuation, the second row shows the historical valuation. Although I don't think these metrics are particularly good - they hide a lot - they can be used as a benchmark.

Novo Nordisk (NVO)

  • Share price (2025-08-08) 50.44 USD; P/E: 13.93; EV/EBITDA: 10.03; P/FCF: 23.38 (Based on Gurufocus)
  • Historical median valuation (10-year average): P/E: 25.3; EV/EBITDA: 17.99; P/FCF: 28.73 (Based on Gurufocus)

Eli Lilly (LLY)

  • Share price (2025-08-08) 625.65 USD; P/E: 40.9; EV/EBITDA: 19.3; P/FCF: 115 (Based on Gurufocus)
  • Historical median valuation (10-year average): P/E: 40.14; EV/EBITDA: 23.33; P/FCF: ? (Based on Gurufocus)

I've also put Eli Lilly next to Novo Nordisk to show how huge the difference in valuation is, much of which is due to future expectations, as you'll see below. Note: the more sources you look at, the more different data you will find, even among paid services, so take these as approximate values at most.

Why don't you see a DCF model in this segment? Because each input data produces a huge variance in the output, and most of the data is an estimated value. Therefore, the valuation will never actually be a single exact number, but rather a range can be defined where the current valuation falls.

You should apply a margin of safety to this price range, according to your risk appetite.

So don't expect an exact price, no one can say this for a stock. However, there are fair value prediction services, almost every major stock screening site has one, I've aggregated them below. However, if you want a good stock support service, subscribe to The Falcon Method (The Falcon Method), entry prices are given for the stocks analyzed there.

Rating (ADR NVO and NOVO B shares can be exchanged 1:1 from USD to DKK)

  • Wall street estimates: 74.29-154.34=114.35 USD (I took into account the Alphaspread, the average of the two extreme values:)
  • Peter Lynch Median P/E: $91.97
  • Morningstar: $71 (4 stars)
  • Gurufocus: $149.29
  • AlphaSpread: $99.65 (26% overvalued compared to base case)
  • SimplyWallst: $204.8

Average (based on 6 reviews): $121.84 (59% underrated)

Novo Nordisk (NVO) Peter Lynch valuation chart
source: Gurufocus, Novo Nordisk (NVO) Peter Lynch valuation chart

How should you interpret the numbers? The above “margin of safety” rule should be applied according to your conviction, so if you really believe in the company, you can even buy it at fair value. I have omitted the usual 10% downward valuation steps that you can find in other analyses (Stock analyses), because for a stock that is 59% undervalued, this is completely unnecessary.

EVA framework, Novo Nordisk (NVO)
source: Interactive Brokers, EVA framework, Novo Nordisk (NVO)

Instead, I've included two images from Interactive Brokers' not-so-recent EVA data so you can see how much expectations are priced into the prices of the two competitors. It's not the exact numbers that are important, but understanding the trend and the underlying content. In the image you can see how much added value the company can create with the capital invested in the business, this is the red part, and the gray bar shows future expectations. The lower the gray area, the less future additional growth the market is pricing in. As you can see, in the case of Novo Nordisk (NVO), the gray and red lines practically meet, and this is the situation in March 2025, when the company's share price was much higher, somewhere around 80 USD. So, the market's future expectations are practically negative for the company, so they did not overpay for the shares. On the right, the FGR chart, which is also an indicator of future growth, is below the 0% line, which I think is completely unrealistic for a company of this quality.

EVA framework, Eli Lilly (LLY)
source: Interactive Brokers, EVA framework, Eli Lilly (LLY)

In contrast, on the Eli Lilly (LLY) chart, the gray part towers like a mountain over the red and blue columns, although this is also March data, at a price of around 800 USD. The difference is still spectacular, and it is almost certain that it would not be zero at the current price of around 630 USD, so in this case you have to expect a significant overpayment.

The bottom line is that in the case of Novo Nordisk (NVO), the valuation is terribly depressed on all levels, the market is almost pricing the death of the stock. How conceivable is this? I don't think so, it seems like a brutal overreaction, especially since the price can drop 10% on news that a drug performed 2-3% worse in a phase III trial. I think this price is simply unrealistic.

🌗Significant news and the last quarter🌗

In this section, I will examine what happened in the last quarter, whether there were any significant news/events. If the company reports semi-annually, we examined this period.

Novo Nordisk (NVO) publishes its reports on a semi-annual basis, as is the case with European companies, but since they also have ADRs on the US stock exchanges, they also publish quarterly data. The most recent one was published in August 2025, Read here:

📈 Novo Nordisk (NVO) Financial Results (per semester)

  • 📊 Revenue growth: 18% increase in the first six months of 2025
  • 💼 Operating profit growth: 29% increase in the first six months of 2025
  • 🍬 GLP-1 diabetes drugs: 10% increase, US market growth of 9%, international market growth of 10%
  • 🏋️‍♂️ Anti-obesity products: 58% increase, US market growth of 36%, international market growth of 125%
  • ⚕️ Rare Diseases Sales: 15% increase, US market growth of 23%, international market growth of 10%
  • 📉 Gross margin: decreased to 83.4%, -1.5% compared to 2024
  • 💰 R&D Costs: 11% decrease, both in Danish krone and at constant exchange rate
  • 💵 Net profit: 22% increase
  • 📈 EPS: 23% growth, 12.49 DKK
  • 💸 Free cash flow: DKK 33.6 billion (compared to DKK 41.3 billion last year)
  • 🏗️ Capital expenditures: DKK 28.1 billion (compared to DKK 18.9 billion last year)
  • 💰 Special dividend: DKK 3.75 per share, an increase of 7% compared to a year earlier

Positive things🌟

  • 📊 18% growth in sales and 29% growth in operating profit in the first half of 2025.
  • 🏥 Novo Nordisk serves 46 million patients with diabetes and obesity-related treatments, an increase of more than 3.5 million patients compared to the previous year.
  • 🧬 R&D projects include advancing amycretin into Phase III clinical development for the treatment of obesity. Phase II clinical trials showed particularly good results, with a 22% weight loss in three months at a 20 mg dose. This increased to 24.3% at a triple dose.
  • 🤝 Exclusive collaboration with Septerna to develop small molecules for the treatment of obesity, type 2 diabetes and other cardiovascular diseases.
  • The number of weekly Ozempic prescriptions reached 690 thousand, while for Wegovy it was 280 thousand.

📌Opinion: The company finally did what it needed to do, implemented a significant capacity expansion and removed the CEO. They also filed 14 lawsuits against semaglutide copies, which will hopefully finally have a market-clearing effect.

Negative things⚠️

  • 📉 Novo Nordisk has lowered its full-year sales forecast for the second time this year.
    • February 2025: 16-24%
    • May 2025: 14-22%
    • August 2025: 8-14% revenue and 10-16% operating profit growth
  • 💼 The launch of generic semaglutide drugs in the United States is impacting the sales of Novo's own products.
  • 🏗️ Gross margin decreased from 84.9% to 83.4% year-over-year, mainly due to Catalent-related expenses and capacity expansions.

📌Opinion: Unfortunately, I can say much more negative than positive. This is the second forecast cut this year. It matters a lot whether the growth is 16-24% or 8-14% and how can there be such a big difference between the two extreme values? This shows me that simply no one can say how much expansion the market dynamics will bring, how which drug will perform, who will steal what share of the other's market. Currently, it seems that Eli Lilly (LLY) is growing at the expense of Novo Nordisk (NVO), mainly due to their drugs Mounjaro and Zepbound.

number of prescriptions written per drug
source: Novo Nordisk 2025 Q2 report, number of prescriptions written by drug

It is also annoying that if the current, otherwise very legitimate capacity expansion had been done 2-3 years ago, they could have overwhelmed the market. I also don't understand why, if they suspended their share buybacks for this year, claiming that they are pumping this capital into capacity expansion, why are they paying a special dividend, the rate of which was even increased by 7%? With such a depressed valuation, it would have been much more logical to suspend the dividend and buy back its own shares.

Management comments:

  • "The weekly Ozempic prescriptions are currently around 690,000 in standard units. While the full impact of the chronic kidney disease indication has yet to be fully realized, this indication allows us to reach an additional patient segment within the type two diabetes population. And we will continue to invest in commercial activities and label updates towards driving further market penetration. This includes Ozempic in the cash channel, which we anticipate launching later this year.”
  • "Wegovy sales increased by 37% in US operations in the first six months of twenty twenty five. The Wegovy sales growth was driven by increased volumes, partially countered by lower realized prices. And Wegovy has around 280,000 weekly prescriptions. As Ludo said, despite the expiration of the FDA grace period for mass compounding on May 22, Novo Nordiskmarket research shows that unsafe and unlawful mass compounding have continued. Multiple entities continue to market and sell compounded GLP-1s under the false guise of personalization, and it is estimated to be around one million patients are on compounded GLP-1s in The US.” —David Moore
  • "Martin Lange: The most common adverse events with amicretin were gastrointestinal, and the vast majority were mild to moderate in severity. People treated with amicretin in the dose dependent sorry, in the dose response part of the trial achieved an estimated body weight loss of 9.7, 16.2%, and 22% after a twelve week maintenance period. This was in the one point two five milligram, five milligram and twenty milligram doses respectively. In the multiple ascending dose part of the trial, people on the sixty milligram amicretin dose achieved an encouraging estimated body weight loss of 24.3% at thirty six weeks. Overall, we are very encouraged by the Phase IbIIa data speaking to the potential of amicretin, both on efficacy and on tolerability.” — Martin Lange

Next report: 2025.11.05

✨Other interesting facts about Novo Nordisk (NVO)✨

Everything that was left out of the previous ones, or if there is any special KPI - key performance indicator - or concept that needs to be explained, is included here.

How successful are pharmaceutical companies: I mentioned earlier that developing a major drug can cost up to $1 billion, and that most drugs never recoup their cost, but I didn't mention why. The answer is simple: they fail clinical trials. The success rate of drugs is similar to the survival rate of startups. I wrote more about this here: Creating a startup portfolio simply and clearly in 2025 I. But what is the success rate of drug manufacturers? It's shockingly low:

  • pre-clinical phase: 69% of drugs reach the first phase from the pre-clinical phase
  • Phase I: 36% of drugs advance to Phase II from Phase I
  • Phase II: 13% of drugs advance to Phase III from Phase I
  • Phase III: 8% of drugs reach FDA approval
  • FDA approval: 8% of the original 90% will receive FDA approval

This means that the chances of manufacturers submitting the drug for FDA approval are roughly 1 in 12.

60 years of hatred, then catalysis: Nordisk and Novo hated each other for about 65 years, even though they were located in the same city and even on the same street. Nordisk basically had a small production capacity and made a living by selling licensed products, namely Insulin Leo, which were manufactured by others. In contrast, Novo had a large production capacity and made their own products. Until the unification in 1989, they were in a bloody competition with each other, accompanied by incredible hatred. This constantly competitive environment is what has made these companies so strong and innovative. I can cite two similar examples from history: the case of Adidas and Puma, and Ferrari and Lamborghini.

The Nazis' insulin suppliers: At the outbreak of World War II, Nazi Germany invaded Denmark, cutting Nordisk off from its markets, which had been making money from licensed products. Of course, the partners continued to manufacture insulin, but Nordisk received nothing for it. Novo, on the other hand, had local manufacturing capacity, so the Nazis forced them to expand it and serve the occupied European territories. After the war, Novo had to hand over the revenue it earned to the Danish state, but it was allowed to keep its increased manufacturing capacity. Nordisk, on the other hand, received some of its revenue from its licensing partners.

NovoCare cash-pay model: a cash-pay program offered by Novo Nordisk in the United States that allows patients to purchase their medications directly, without insurance coverage, and the price of the medication may be discounted under the program. Direct purchase in this case means the pharmacy, bypassing insurance companies, so customers can theoretically get the medication at a lower price. Novo Nordisk (NVO) introduced the above model together with the CVS Health pharmacy chain.

Accuracy of estimates: I have read several estimates about how big the insulin, diabetes, and consumer drug markets will be in 10 years. Currently, there are approximately 589 million diabetic patients in the 20-79 age group according to the International Diabetes Federation and 830 million in the total population according to the WHO, affecting one in ten people. Previous studies clearly show how inaccurate these estimates are:

  • Global Prevalence of Diabetes: Estimates for the Year 2000 and 2030: Within five years, people living with diabetes globally will account for 4.4% of the total population, increasing from 176 million to 366 million.
  • Shaw, Sicree, and Zimmet's (2010) revision of the previous research: The number of people with diabetes will increase from 6.4% to 7.7% within five years, increasing the number of patients from 285 million to 439 million.
  • Research by Saeedi, Petersohn, Salpea, Bright & Williams, 2019: The estimated number of people with disabilities is 9.3% of the total population, or 463 million people, and will increase to 10.2%, or 578 million people, within five years, and to 10.9%, or 700 million people, in twenty years.

As you can see, previous models estimated the numbers quite conservatively, including the number of people in need of treatment and the market size.

🔑Key Performance Indicators (KPIs)🔑

Medical equipment sales: The key question is how Ozempic, Wegovy and Rybelsus perform, as these semaglutide-based drugs account for the majority of revenue.

American market: Novo Nordisk (NVO) earns 57% of the revenue here, and Eli Lilly (LLY) is also much stronger here, so it is definitely necessary to monitor the results of the two companies' struggle territorially.

Product development chain: Both insulin makers are very innovative companies, so I don't think they will be threatened by patent expiration as long as they are able to continuously develop new drugs. In the case of Novo Nordisk (NVO), the results of the CagriSema research and the successful FDA approval should be monitored, but it is also worth monitoring the entire product development chain, including Eli Lilly (LLY).

Novo Nordisk (NVO) Summary

Summary of the analysis, drawing lessons.

Novo Nordisk (NVO) is a surprisingly high-quality company whose management made a huge mistake by not scaling up its own manufacturing capacity and letting the competition get to them. But temporary competitive disadvantages like this have been repeating themselves for about 100 years, with Novo and Eli Lilly making headway, and now the latter is making better products and their trademarks are lasting longer than their competitors'. This is reflected in the companies' share prices, which jump by up to 15-20% every week, as if market participants were throwing a hot stone back and forth between each other. There are few topics as hot as consumer products, perhaps I could also include artificial intelligence.

However, the current disadvantage is not insurmountable, and I believe that Novo Nordisk's (NVO) low valuation does not reflect the company's true value at all. The question you need to ask yourself is: Will Novo Nordisk be completely wiped out by competition in a currently duopolistic market that could grow a hundredfold in the next 10 years? Unlikely. However, it is plausible that more and more pharmaceutical companies will join the race, simply because there will be too much money on the table to ignore. However, I think the tide will lift everyone up for years to come, it's such a rapidly expanding market. After that, in a few years, we'll see who stays on their feet.

However, the usual pharmaceutical risks must be taken into account here as well, such as the emergence of biosimilars, class action lawsuits after some serious side effect, and I could list more. Great success always comes with great risk.

Frequently Asked Questions (FAQ)

What is diabetes?

Diabetes means persistently high blood sugar levels, and there are two main types: type 1 diabetes (autoimmune disease) and type 2 diabetes (insulin resistance).

What is diabetes? How is it different from a diabetes test?

Diabetes and prediabetes are the same disease, and both are associated with long-term elevations in blood sugar levels. The term diabetes is often used to include both type 2 and type 1 diabetes.

What is insulin and insulin disease?

Insulin is a hormone that helps cells take in sugar and is essential for the treatment of diabetes. Insulin resistance, or diabetes, occurs when the body cannot produce enough insulin or use it properly.

What are GLP-1-using drugs?

GLP-1 receptor agonists are medications that are used to treat diabetes and obesity, such as Wegovy, Ozempic, Rybelsus, Mounjaro, and Zepbound.

What is Wegovy?

Wegovy is a product of the company Novo Nordisk (NVO), a semaglutide-based injectable drug that helps with weight loss and blood sugar control, and is used to treat obesity.

What is Ozempic?

Ozempic is a product of the company Novo Nordisk (NVO), a semaglutide-based injection used for the treatment of diabetes and weight loss, also through the GLP-1 receptor agonist mechanism of action.

What is Rybelsus?

Rybelsus is a product of the company Novo Nordisk (NVO), an oral form of semaglutide that provides the same effects as Ozempic, but in tablet form, and helps treat diabetes and lose weight.

What is Mounjaro?

Mounjaro is a product of Eli Lilly (LLY), a tirzepatide-based drug that targets GLP-1 and GIP receptors and is effective in treating diabetes and promoting weight loss.

What is Zepbound?

Zepbound is a tirzepatide-based drug manufactured by Eli Lilly (LLY) that helps treat diabetes and lose weight by activating GLP-1 and GIP receptors together.

Which broker should I choose to buy shares?

There are several aspects to consider when choosing a broker - we will write a complete article about this - but I would like to highlight a few that are worth considering:

  • size, reliability: The bigger a broker, the safer it is. Those with a banking background – Erste, K&H, Charles Schwab, etc. – are even better, and well-known brokers are typically more reliable.
  • expenditures: Brokers operate with various costs, such as the account management fee, the portfolio fee - which is the worst cost -, the purchase/sale fee and the currency exchange cost (if USD is not deposited in the brokerage account)
  • Availability of instruments: It doesn't matter which broker has which market available, or whether they add the given instrument upon request and how quickly.
  • account type: cash or margin account, the latter can only be used for options. For Hungarian tax residents, having a TBSZ account is important, but citizens of other countries also have special options – such as the American 401K retirement savings account – which are either supported by the broker or not.
  • surface: is one of the most underrated aspects, and it can be a real pain. Anyone who had an account with Random Capital, a now-defunct Hungarian broker, knows what it's like to work on a platform left over from the 90s. Erste's system is lousy slow, Interactive Brokers requires a flight test, and LightYear believes in simple but modern solutions.

Based on the above, I recommend the Interactive Brokers account because:

  • the world's largest broker with a strong background
  • a few million instruments are available on it, and shares listed on multiple markets – e.g. both the original and the ADR – of a single share are often available
  • Interactive Brokers a discount broker, they have the lowest prices on the market
  • you can link your Wise account to them, from which you can quickly transfer money
  • Morningstar's analyses are available for free under the fundamental explorer (good for analysis)
  • EVA framework data is available under fundamental explorer (useful for analysis)
  • they have both cash and margin accounts, Hungarian citizens can open a TBSZ
  • you can use three types of interfaces: there is a web and PC client and a phone application

Legal and liability statement (aka. disclaimer): My articles contain personal opinions, I write them solely for my own entertainment and that of my readers. The articles published here do NOT in any way exhaust the scope of investment advice. I have never intended, do not intend, and am unlikely to provide such in the future. What is written here is for informational purposes only and should NOT be construed as an offer. The expression of opinion is NOT in any way considered a guarantee to sell or buy financial instruments. You are SOLELY responsible for the decisions you make, and no one else, including me, assumes the risk.

If you found the content useful, subscribe to be notified of new articles