Is Novo Nordisk's GLP-1 Dominance Fading After Lilly's Clinical Wins?

Novo Nordisk NVO has endured a brutal week, with its shares plunging 21% after a series of disappointing clinical results and mounting pricing pressures erased virtually all the gains accumulated since the 2021 approval of its blockbuster obesity therapy, Wegovy (semaglutide).

Eli Lilly LLY has emerged as Novo Nordisk’s most formidable rival in the GLP-1 market for obesity. Its Zepbound (tirzepatide injection) competes directly with NVO’s Wegovy and, despite launching later, has steadily eroded Wegovy’s market share, driven largely by data showing superior weight-loss efficacy.

Last week, Novo Nordisk announced that Eli Lilly’s Zepbound 15 mg outperformed its lead next-generation obesity treatment candidate, CagriSema (cagrilintide 2.4 mg/semaglutide 2.4 mg) in the 84-week, phase III REDEFINE 4 study. Among patients who adhered to treatment, Zepbound delivered 25.5% weight loss at 84 weeks compared to 23% with CagriSema. As a result, CagriSema failed to meet the primary endpoint of demonstrating non-inferiority to tirzepatide, marking a clear competitive win for Lilly’s therapy.

The efficacy gap reinforced Zepbound’s positioning as the more potent weight-loss option over CagriSema at the studied doses. The outcome is a setback for Novo Nordisk’s effort to counter Lilly’s momentum in the obesity market, particularly as Zepbound continues to set the benchmark for efficacy. NVO has submitted CagriSema to the FDA based on earlier studies and plans additional studies, including higher-dose combinations. Still, for now, Zepbound has strengthened its leadership in head-to-head performance. This was detrimental to the stock.

Adding to the turmoil, later the same week, Eli Lilly reported that its oral GLP-1 candidate, orforglipron, outperformed Novo Nordisk’s Rybelsus (oral semaglutide) in the head-to-head phase III ACHIEVE-3 study in type II diabetes (T2D). At 52 weeks, the highest dose of orforglipron (36 mg) reduced A1C by 2.2% compared to 1.4% with Rybelsus 14 mg, while also delivering 9.2% weight loss (19.7 lbs) compared to 5.3% (11.0 lbs) with Rybelsus 14 mg — a 73.6% greater relative weight reduction. Orforglipron met superiority criteria across the primary and all key secondary endpoints, including significantly higher proportions of patients achieving stringent A1C targets.

Beyond glycemic control and weight loss, orforglipron demonstrated favorable effects on several cardiovascular risk markers and offers the added convenience of no food or water timing restrictions — a potential practical edge over Rybelsus. The overall data position orforglipron as a potentially more potent and user-friendly oral GLP-1 option, tightening its competitive grip in the cardiometabolic space.

Further complicating the outlook, Novo Nordisk plans steep U.S. list price cuts for its three largest revenue drivers — Wegovy, Ozempic (semaglutide injection for T2D) and Rybelsus — lowering them to $675 per month from January 2027 to expand patient access. While the move could help remove affordability barriers and broaden uptake, it risks compressing margins across NVO’s core franchise at a time of intensifying competition from Eli Lilly’s rapidly gaining obesity and diabetes portfolio. With these therapies accounting for a substantial share of Novo Nordisk’s revenue base, deeper price reductions could heighten execution risk, forcing the company to rely more heavily on volume growth and market share defense to offset pricing pressure — an increasingly challenging task in a fiercely competitive GLP-1 landscape.

Competition Heating Up in the Obesity Space

Eli Lilly markets its tirzepatide injections as Zepbound for obesity and Mounjaro for T2D. Despite being on the market for just over three years, Mounjaro and Zepbound have seen exceptional sales growth, becoming LLY’s key top-line drivers. In 2025, the drugs generated combined sales of $36.5 billion, comprising around 56% of the company’s total revenues. A regulatory application seeking the FDA approval of Lilly’s much-anticipated oral GLP-1 pill for obesity, orforglipron, is also currently under review, with a decision expected soon.

The obesity space has garnered much of the spotlight over the past year due to the sizeable and still underpenetrated market opportunity. Smaller biotech firms, like Viking Therapeutics VKTX, are also advancing GLP-1-based therapies to challenge the incumbents. Viking Therapeutics’ dual GIPR/GLP-1 receptor agonist, VK2735, is being developed both as oral and subcutaneous formulations for the treatment of obesity. Viking Therapeutics plans to advance oral VK2735 into phase III development for obesity in the third quarter of 2026.

NVO Stock Price, Valuation & Estimates

In the past six months, Novo Nordisk shares have lost 34% against the industry’s 24.5% growth. The company has also underperformed the sector and the S&P 500 during the same time frame, as seen in the chart below.

NVO Stock Underperforms the Industry, Sector & the S&P 500

Novo Nordisk is trading at a discount to the industry, as seen in the chart below. Going by the price/earnings ratio, the company’s shares currently trade at 11.17 forward earnings, which is lower than 18.70 for the industry. The stock is trading much below its five-year mean of 29.25.

NVO Stock Valuation

Earnings estimates for 2026 have declined from $3.54 to $3.36 per share over the past 60 days. During the same time frame, Novo Nordisk’s 2027 earnings estimates have declined from $3.65 to $3.30.

NVO Estimate Movement

Novo Nordisk currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research