Novo Nordisk stock drop divides investors

Novo Nordisk: bargain buy or catching a falling knife?

The price of Novo Nordisk has become a battleground. One investor opens a position at $50, convinced the Danish pharmaceutical giant remains a solid business, but admits to keeping exposure low because they view the pharma sector as "terrible." The stock has continued its decline since then and now hovers around €40. The question lingering in every message is the same: are we facing a historic opportunity or a falling knife?

Market data does not invite optimism. The company issued a profit warning, announced mass layoffs—reportedly affecting 9,000 employees—and its experimental obesity candidate underperformed expectations in trials. Competition from Eli Lilly is intensifying with products that several analyses deem superior and cheaper. The result is a plunge that caught many off guard.

The problem isn't just Trump

Some attribute the drop to alleged political pressure, suggesting the US president is punishing Denmark for refusing to sell Greenland. The theory sounds like a movie plot, but the numbers tell a different story. The real issues predate this: Novo Nordisk generated an oversupply it could not cover, and its key competitive advantage—being a pioneer in GLP-1 drugs for obesity—has eroded. Eli Lilly entered aggressively and already holds a similar market share.

The cost structure doesn't help either. The firm hired heavily during boom years and now faces demand growth below projections. Layoffs are the inevitable adjustment. "They ballooned with Ozempic and are now preparing for the real battle against Lilly," summarizes an analysis circulating among investors.

Insulin business: the true safety net

This is where pessimism meets reality. Novo Nordisk produces 50% of the world's insulin, and this segment accounts for 70-80% of its profits. Insulin demand will rise with population aging, and the company carries no debt thanks to Ozempic earnings. This cash is being used to build a new factory.

"Just the insulin sales alone justify a €40 share price," argues one investor who sees the current level as an opportunity. The bearish scenario suggests GLP-1 competition will continue eroding margins, and the Canadian exclusivity expires in two years, opening the door to generics. The US patent expires in 2032, but pressure to renegotiate prices has already begun.

The trap of oral formats

The arrival of oral versions of obesity drugs is presented as a threat. However, technical analysis dispels part of the myth: an oral tablet requires much higher doses than an injectable. If the injectable dose is 2 mg and the oral is 20 mg, producing the oral version demands 20 times more active ingredient. This increases production costs and limits available doses. "It's not as simple as saying competitors have better formats," warns an investor with industry knowledge.

Pharmaceutical history offers an uncomfortable mirror. Benzodiazepines and statins trinc the same cycle: a pioneer dominated for years, then twenty competitors arrived, and the market fragmented. Novo Nordisk holds CagriSema and Amycretin in its pipeline, which analyses suggest are superior to semaglutide. The issue is that eight drugs are now competing for the same pie.

Is it a good time to enter Novo Nordisk?

There is no consensus. Those advocating entry at these prices cling to the insulin business, zero debt, and the thesis that the obesity market is a multi-decade play. Prudent voices note the company is "bureaucratic and poorly managed," has missed the innovation train, and that the new CEO might be cleaning up the balance sheet before tougher times arrive.

Cautious calculations place an interesting entry price at €35. At that level, even those who avoid pharma would consider it. The stock trades around €40, with accumulated losses leaving many down 35%. "Sometimes you're right, sometimes you screw up by getting ahead," admits an investor who put in €2,000 and now sees red results.

The question nobody can answer with certainty is whether Novo Nordisk will return to its former glory or if it has already peaked. As always in the markets, time will tell. Meanwhile, the knife keeps falling.