Major Stock Drop Following Disappointing Trial Results
Novo Nordisk shares fell by 20% on Friday after the company’s latest weight loss drug, CagriSema, failed to meet expectations in clinical trials. This decline wiped out €90 billion in market value, marking the steepest single-day drop in the company’s history.
CagriSema Falls Short of Expectations
In a press release, Novo Nordisk stated that its Phase 3 trial showed CagriSema led to 22.7% weight loss over 68 weeks, falling short of the anticipated 25% reduction. Furthermore, among patients who did not strictly adhere to the treatment, the weight loss rate dropped further to 20.4%.
This result raised concerns about Novo Nordisk’s competitiveness in the highly lucrative obesity and diabetes drug market. The company’s main U.S. competitor, Eli Lilly, reported a 24% weight loss in trials for its latest drug, Retatrutide, in September.
Eli Lilly’s Advantage in the Market
While Novo Nordisk suffered losses, Eli Lilly’s shares surged by 10% on the same day before closing with a 1.35% gain. Unlike Novo, Eli Lilly’s stock has risen 32% this year.
Another issue for Novo Nordisk is potential side effects associated with CagriSema, which could impact its market position against rivals. Reports indicate that only 57% of patients reached the highest CagriSema dose, compared to 83% for Cagrilintide and 70% for Semaglutide.
Future Research and Upcoming Trials
Despite the setback, Novo Nordisk’s Executive Vice President for Development, Martin Holst Lange, stated that the company plans to explore CagriSema’s weight loss potential further using insights from the REDEFINE 1 study.
Additionally, Novo Nordisk announced that another key Phase 3 trial, REDEFINE 2, focusing on type 2 diabetes patients with obesity or overweight issues, is expected to release results in the first half of 2025.
Growing Competition in the Weight Loss Drug Market
Leading pharmaceutical companies have intensified efforts to develop new weight loss drugs in response to increasing global demand. Supply chain limitations earlier this year led to shortages of obesity and diabetes medications.
The GLP-1 drug market is projected to grow to between $150 billion (€144 billion) and $200 billion (€192 billion) by 2030.
Novo Nordisk’s Market Position and Pressure to Innovate
Novo Nordisk’s best-selling weight loss drug, Wegovy, and its diabetes medication, Ozempic, accounted for 61% of the company’s total sales in the first nine months of the year. Since the FDA’s approval of Wegovy, Novo Nordisk’s market value tripled, peaking in June 2024.
However, the company faces stiff competition from Eli Lilly, whose market value stands at $691 billion (€662 billion)—nearly double that of Novo Nordisk.
Eli Lilly’s weight loss medication, Zepbound, and diabetes treatment, Mounjaro, have positioned the company as a dominant player in the industry.
With Wegovy’s patent set to expire in the early 2030s, Novo Nordisk is under pressure to accelerate the development of next-generation weight loss drugs.
Analyst Outlook on Novo Nordisk’s Future
A Reuters report from August suggested that Novo Nordisk and Eli Lilly were expected to equally share the weight loss drug market by the end of the year. However, the disappointing CagriSema trial results may now lower analysts’ expectations for Novo’s future growth.
Given the increasing competition and high market stakes, Novo Nordisk’s ability to innovate and develop superior weight loss treatments will be crucial for maintaining its leadership position.
