Is There More Downside For Novo Nordisk Stock?

Novo Nordisk stock has been under pressure after its Ozempic pill failed in Alzheimer’s disease trials, adding fresh downside risks for the pioneer in weight loss drugs. While Eli Lilly stock has soared past a $1 trillion market cap, Novo Nordisk is struggling to keep pace, both in terms of growth and pipeline advancement. What’s behind this divergence, and should investors be worried about further pain for NVO? Let’s break it down.

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Why Novo Nordisk’s Alzheimer’s Trial Failure Matters

Novo Nordisk’s recent stock plunge was triggered by the company’s announcement that two large clinical trials for semaglutide (the active ingredient in Ozempic and Wegovy) showed no cognitive benefit for patients with Alzheimer’s disease.

This outcome immediately dashed investor hopes for a major new blockbuster indication and signals that Novo Nordisk’s planned expansion into the neurology segment has hit a significant roadblock.

While the company remains a dominant leader in the obesity and diabetes markets, the failure to secure breakthroughs outside of these core therapeutic areas is becoming a growing concern for investors.

NVO vs LLY: Growth, Margins, and Valuation

Looking at the numbers, Eli Lilly is clearly outpacing Novo Nordisk:

• Revenue growth in 2024: Novo Nordisk – 26%, Eli Lilly – 32%
• Year-to-date 2025 revenue growth: Novo Nordisk – 15%, Eli Lilly – 46%
• Year-to-date 2025 operating profit margins: Novo Nordisk – 42%, Eli Lilly – 39%
• Valuation multiples (TTM P/E): Novo Nordisk – 13x, Eli Lilly – 49x
• Market caps (11/24): Novo Nordisk – $200 billion, Eli Lilly – $960 billion

Also, look at how Eli Lilly’s financials compare with its peers.

Despite NVO’s still strong operating margins and continued obesity sales growth, its guidance has been cut repeatedly this year as competition and market share pressures mount. Eli Lilly’s aggressive pipeline, especially its lead with an oral GLP-1 pill Zepbound, is a major differentiator. While Novo is working on oral semaglutide, Lilly’s earlier regulatory wins and broader oral drug pipeline give it a significant edge.

Valuation and Downside Risks

NVO now trades at a fraction of its all-time high, down nearly 65% from 2024 peaks. Its valuation multiple is attractive compared to LLY, but there’s a reason for the multiple compression. The slowdown in obesity drug growth, combined with the lack of new blockbuster indications, has investors pricing in continued competitive pressures and margin erosion. Market share for GLP-1s is also fragmenting, with Lilly and others gaining ground as Novo struggles to keep up.

Furthermore, supply constraints and pricing pressures are starting to impact Novo’s margins, which have contracted lately.​ The pipeline, while solid, lacks near-term blockbuster candidates compared to Lilly’s broad oral and injectable portfolio.​ Lastly, international obesity drug sales are slowing as competition intensifies and payer scrutiny rises.

The Bottom Line

In summary, while Novo Nordisk remains profitable and well-positioned in obesity and diabetes, its recent setbacks, including the Alzheimer’s trial failure, highlight the risks of relying too heavily on existing franchises. The stock may look cheap versus LLY, but without new growth catalysts or margin expansion, the valuation multiple could stay suppressed for the foreseeable future.

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