Executive Summary / Key Takeaways

• Novo Nordisk is undergoing a significant company-wide transformation, including a workforce reduction of 9,000 roles, to streamline operations and reinvest DKK 8 billion in annual savings into core growth areas of diabetes and obesity.
• Despite a recent downward revision of its 2025 operating profit growth outlook to 4-10% at constant exchange rates (CER) due to restructuring costs, the company maintains robust underlying sales growth, particularly in its GLP-1 franchise.
• Novo Nordisk's core investment thesis is underpinned by its differentiated semaglutide platform, offering broad benefits in weight loss, cardiovascular, renal, and liver diseases, alongside a promising pipeline including oral semaglutide, CagriSema, and amycretin.
• The company is aggressively countering the impact of unlawful compounded GLP-1s through legal actions, direct-to-patient initiatives like NovoCare Pharmacy, and strategic formulary wins such as CVS Caremark 's exclusive coverage for Wegovy.
• Under new CEO Mike Doustdar, the focus is on heightened commercial execution, operational efficiency, and prioritizing investments to capitalize on the vast, largely untapped global markets for diabetes and obesity treatments.

Setting the Scene: A Giant's Evolution in Metabolic Health

Novo Nordisk A/S, founded in Denmark in 1923, has cultivated a century-long heritage in diabetes care, evolving into a global healthcare leader with a profound impact on metabolic health. The company's core business revolves around pioneering scientific breakthroughs, expanding access to medicines, and working to prevent and ultimately cure serious chronic diseases, primarily diabetes and obesity. This strategic focus has positioned Novo Nordisk at the forefront of a rapidly expanding industry, driven by a staggering global unmet need: over 550 million people live with Type 1 and Type 2 diabetes, and more than 900 million people live with obesity, with the vast majority residing outside the United States. Despite the prevalence, GLP-1 penetration remains remarkably low, with less than 7% of estimated diabetes prescriptions being GLP-1s and less than 1% of people with obesity globally treated with branded anti-obesity medications.

This immense market opportunity has fueled Novo Nordisk's innovation-based growth strategy. The company's patient reach for GLP-1 therapies nearly tripled over the three years leading up to 2024, serving almost 46 million patients by the first half of 2025. Key product introductions like Ozempic in 2018 and Wegovy around late 2020 or early 2021 quickly achieved blockbuster status, with Wegovy sales surging from $885 million in 2022 to approximately $4.57 billion in 2023. To support this escalating demand, Novo Nordisk acquired three Catalent manufacturing sites in December 2024, expanding its global fill-and-finish footprint from 11 to 14 sites, with increased market supply expected from 2026.

Technological Edge: The Semaglutide Platform and Beyond

Novo Nordisk's competitive moat is deeply rooted in its differentiated technology, particularly its GLP-1 receptor agonist platform, semaglutide. This core technology has demonstrated tangible and quantifiable benefits across multiple therapeutic areas, extending far beyond initial indications.

Semaglutide, the active ingredient in Ozempic and Wegovy, has shown remarkable efficacy in weight loss. In the REDEFINE 1 trial, CagriSema, a fixed-dose combination of cagrilintide and semaglutide, demonstrated a superior and clinically relevant mean weight loss of 22.7% after 68 weeks. A higher dose of semaglutide (7.2 mg) in the STEP UP trial achieved a superior weight loss of 20.7% over 72 weeks, with one-third of participants losing 25% or more of their body weight. These figures set a high bar for efficacy in the obesity treatment landscape.

Beyond weight reduction, semaglutide has established an "unsurpassed CV profile" within the incretin space. Ozempic has been proven to reduce the risk of major adverse cardiovascular events (MACE) by 23% compared to dulaglutide in a real-world study of U.S. Medicare patients with Type 2 diabetes and atherosclerotic cardiovascular disease (ASCVD). Furthermore, the STEER real-world study indicated that Wegovy reduced the risk of heart attack, stroke, or cardiovascular-related death by a significant 57% compared to Eli Lilly's tirzepatide in people with overweight or obesity and established cardiovascular disease without diabetes, for patients on continuous treatment. Ozempic is also the only GLP-1 receptor agonist proven to reduce the risk of chronic kidney disease in people with Type 2 diabetes, based on the FLOW trial data and U.S. FDA approval. Oral semaglutide 14mg demonstrated a 14% reduction in MACE in the SOUL trial.

A significant recent development is the U.S. FDA approval of Wegovy for the treatment of metabolic dysfunction-associated steatohepatitis (MASH) in adults with moderate to advanced liver fibrosis (F2 to F3) in August 2025. This makes Wegovy "the first and only GLP-1 treatment approved for MASH," with the ESSENCE trial demonstrating statistically significant and superior improvements in both MASH resolution and liver fibrosis. This is particularly impactful given that one in three people with overweight or obesity live with MASH, representing a substantial unmet need. The EMA has also adopted a positive opinion for a Wegovy label update in the EU to include heart failure-related symptoms and knee osteoarthritis.

Novo Nordisk's R&D pipeline continues to push the boundaries of metabolic innovation. The company submitted oral semaglutide 25 mg for U.S. FDA approval for obesity in Q1 2025, with a decision expected around the turn of the year. This "Wegovy in a pill" aims to be the "first oral GLP-1 treatment for obesity", offering an average weight loss of 16.6% in the OASIS 4 trial. The manufacturing of the active pharmaceutical ingredient (API), bulk tablet, and packaging for oral semaglutide 25 mg are all carried out in the U.S. and are fully operational, indicating readiness for a non-supply-restricted launch.

Further in the pipeline, subcutaneous and oral amycretin, a novel GLP-1 and amylin receptor agonist, will advance into Phase III clinical development (the AMAZE program) in early 2026, following promising Phase Ib/IIa data showing up to 22% body weight loss. A new Phase IIIb trial, REDEFINE 11, has been initiated for CagriSema to investigate further efficacy and safety over 80 weeks, with regulatory submission anticipated in Q1 2026. The company is also exploring triple agonists (GLP-1, GIP, Amylin) with a Phase I readout expected in H2 2025. These technological advancements contribute significantly to Novo Nordisk's competitive moat, enabling it to address diverse patient segments, expand market opportunities, and secure long-term growth by delivering superior treatment options.

Financial Performance and Operational Strength

Novo Nordisk has demonstrated robust financial performance, reflecting its strong strategic execution and the efficacy of its technological platform. For the first six months of 2025, the company reported an 18% sales growth and a 29% operating profit growth at constant exchange rates (CER). This growth was significantly driven by its GLP-1 franchise, with obesity care sales surging by 58% at CER to DKK 38.8 billion, including 36% growth in U.S. Operations and a remarkable 125% growth in International Operations. Wegovy sales alone reached DKK 36.8 billion in H1 2025, with International Operations contributing DKK 12.2 billion, growing at an impressive 335%.

Despite this strong top-line performance, profitability metrics have faced some headwinds. The gross margin decreased to 83.4% in H1 2025 from 84.9% in 2024, primarily due to amortizations and depreciations related to the Catalent acquisition and ongoing capacity expansions. Sales and distribution costs increased by 15% at CER, driven by promotional activities for Wegovy and Ozempic in the U.S. and international launch efforts. Research and development (R&D) costs decreased by 11% at CER, mainly due to a DKK 5.7 billion impairment loss related to ocedurenone and other intangible assets in 2024, partially offset by increased investments in obesity care and late-stage clinical trials. Net financial items showed a loss of DKK 1.4 billion in H1 2025, reflecting financing costs from the debt-financed Catalent transaction.

The company's liquidity and capital allocation strategy underscore its commitment to long-term growth. Free cash flow in H1 2025 was DKK 33.6 billion, a reduction from DKK 41.3 billion in H1 2024, primarily due to increased capital expenditures. Capital expenditure for property, plant, and equipment reached DKK 28.1 billion in H1 2025, up from DKK 18.9 billion in 2024, reflecting substantial investments in API production and fill/finish capacity to meet surging demand. For the full year 2025, capital expenditure is expected to be around DKK 65 billion. Novo Nordisk prioritizes internal growth investments, followed by dividends, and then business development, with share buybacks serving as a flexible measure for excess cash. Management believes that the company is "fairly close to the peak" of its CapEx cycle, with the peptide fill/finish platform capable of catering to "many millions of patients in the coming decades."

In a significant operational move, Novo Nordisk announced a company-wide transformation on September 10, 2025, to simplify its organization and increase decision-making speed. This includes a planned reduction of approximately 9,000 global roles by the end of 2026, aiming to deliver DKK 8 billion in annualized savings. These savings will be strategically reinvested into growth opportunities within diabetes and obesity, including commercial execution and R&D programs. This restructuring is expected to incur DKK 8 billion in one-off costs in Q3 2025, impacting the full-year operating profit growth outlook.

Competitive Dynamics and Strategic Positioning

Novo Nordisk operates in a highly competitive landscape, particularly in the burgeoning GLP-1 market, where it faces intense rivalry from major pharmaceutical players and the persistent challenge of compounded alternatives. The company maintains a strong leadership position, holding a 71% total diabetes and obesity GLP-1 volume market share in International Operations and over 50% market share in the U.S. GLP-1 diabetes segment by total monthly prescriptions.

Eli Lilly stands as Novo Nordisk's primary competitor. While Novo Nordisk's Wegovy demonstrated a significant 57% greater risk reduction for MACE compared to Eli Lilly's tirzepatide in a real-world study, Eli Lilly's Zepbound (tirzepatide) showed superior weight loss results in the SURMOUNT-5 trial, with participants losing an average of 20.2% of body weight compared to Wegovy's 13.7%. Analysts anticipate Lilly's Mounjaro sales could surpass Ozempic by 2026. Novo Nordisk's strategic response includes leveraging semaglutide's "unsurpassed CV profile" and expanding its pipeline with next-generation therapies like CagriSema, which is in a head-to-head trial (REDEFINE 4) against tirzepatide to test for superiority.

A significant near-term challenge has been the "persistent use of compounded GLP-1s", which impacted Wegovy's penetration in the U.S. cash channel. Despite the FDA's grace period expiration on May 22, 2025, market research indicates that "unsafe and unlawful mass compounding has continued," with an estimated 1 million patients on these compounded versions. Novo Nordisk is actively pursuing legal actions and engaging with regulators to curtail this practice, emphasizing patient safety and the dangers of illicit active pharmaceutical ingredients. Concurrently, the company is expanding access to authentic, FDA-approved products through initiatives like NovoCare Pharmacy, offering Wegovy and Ozempic for $499 per month to eligible cash-paying patients, and collaborating with telehealth organizations. A major commercial win came with CVS Caremark (CVS) selecting Wegovy as the sole GLP-1 medicine covered for obesity on its national template formulary, effective July 1, 2025.

In the oral obesity market, Novo Nordisk aims to be the first with its oral semaglutide 25 mg, competing with Eli Lilly's experimental orforglipron. This first-mover advantage with a known molecule and established efficacy/safety profile is a key strategic play. The company's global expansion for Wegovy is also accelerating, with launches in approximately 35 countries, including over 15 new markets in 2025.

Outlook and Growth Trajectory

Novo Nordisk's outlook for 2025 reflects both the significant growth opportunities in its core therapeutic areas and the impact of strategic adjustments. The company updated its full-year 2025 operating profit growth outlook to 4-10% at constant exchange rates (CER), a revision from the 10-16% issued on August 6, 2025. This change is primarily due to DKK 8 billion in one-off restructuring costs associated with the company-wide transformation. The sales growth outlook for 2025 is now expected to be between 8% and 14% at CER.

These revised figures are underpinned by several key assumptions. Management anticipates a reduction in the number of patients on compounded GLP-1 treatments in the second half of 2025, expecting many to transition to branded alternatives. The positive impact from the CVS formulary decision, where Wegovy is now the exclusive GLP-1 for obesity, is also factored in. Continued strong performance and launches in International Operations are expected to contribute to growth. Net financial items for 2025 are projected to be a gain of approximately DKK 1.6 billion, mainly from hedged currencies, offset by interest expenses related to the Catalent (CTLT) transaction. Capital expenditure remains substantial at around DKK 65 billion for 2025, reflecting ongoing global supply chain expansion. Free cash flow is now expected to be DKK 35-45 billion, reflecting the lower-than-expected sales growth, primarily due to reduced volume growth of GLP-1 treatments in the U.S.

Looking beyond 2025, the company's strategic aspirations remain firmly focused on innovation-based growth. The new CEO, Mike Doustdar, has emphasized a commitment to "instilling an increased performance-based culture, deploying our resources ever more effectively, and prioritising investment where it will have the most impact—behind our leading therapy areas." The substantial global unmet need in diabetes and obesity, coupled with Novo Nordisk's robust pipeline and expanding manufacturing capacity, positions the company for sustained long-term growth.

Key Risks

Despite its strong market position and innovative pipeline, Novo Nordisk faces several pertinent risks. The persistent and unlawful use of compounded GLP-1s continues to impact branded prescription uptake, particularly in the U.S. cash channel. While the company is taking aggressive legal and commercial actions, the full resolution and impact remain uncertain. Intensifying competition from Eli Lilly , with its strong pipeline and market share gains in certain segments, poses a continuous threat to Novo Nordisk's leadership.

Regulatory and political risks are also significant. The U.S. FDA issued warning letters to Novo Nordisk, Eli Lilly , and Hims & Hers Health (HIMS) regarding alleged exaggeration of GLP-1 benefits and underestimation of severe threats. Furthermore, GLP-1s have been linked to rare but serious side effects such as pancreatitis and non-arteritic anterior ischemic optic neuropathy (NAION), which could lead to increased regulatory scrutiny and impact patient perception. The Inflation Reduction Act (IRA) in the U.S. will lead to Medicare price cuts for semaglutide starting in 2027, and potential U.S. tariffs on imported branded drugs could significantly impact free cash flow. Lastly, the company is currently facing a securities law violation lawsuit related to its growth potential and the impact of compounded GLP-1s.

Conclusion

Novo Nordisk stands at a pivotal juncture, undergoing a strategic transformation to sharpen its focus and accelerate growth in the vast and underserved metabolic disease markets. The company's century-long heritage in diabetes and its current dominance in GLP-1 therapies provide a robust foundation, further strengthened by a pipeline of next-generation treatments like oral semaglutide, CagriSema, and amycretin. These technological differentiators, offering unparalleled benefits in weight loss, cardiovascular, renal, and liver health, are critical to expanding its competitive moat and addressing diverse patient needs.

While facing near-term headwinds from persistent unlawful compounding and intensifying competition from Eli Lilly (LLY), Novo Nordisk's aggressive commercial strategies, including direct-to-patient initiatives and strategic formulary wins, are designed to reclaim market share and drive volume growth. Under new leadership, the company's commitment to operational efficiency and strategic reinvestment of savings into R&D and commercial execution positions it for sustainable long-term growth. Despite the inherent risks of a dynamic pharmaceutical landscape, Novo Nordisk's deep scientific expertise, expanding global footprint, and continuous innovation underscore a compelling investment thesis centered on its ability to redefine metabolic health and deliver life-changing treatments to millions worldwide.