Why Novo Nordisk's Stock Is Fluctuating Despite Surge in Obesity Drug Sales

Obesity drug sales boost Novo Nordisk’s performance, but growth slowdown and stock volatility pose challenges for the company in 2025 / Reuters

Novo Nordisk, the Danish pharmaceutical giant famous for its obesity treatment “Wegovy,” has experienced a significant surge in sales from its obesity drug division. Thanks to this growth, the company posted solid results in 2024, with its obesity treatment sales increasing by 56% year-on-year, totaling 65.1 billion Danish Krone (approximately 13.13 trillion KRW). The company's overall revenue also rose by 26% to reach 290 billion Danish Krone (around 58.48 trillion KRW), exceeding market expectations. Additionally, operating profit increased by 25%, reaching 12.83 billion Danish Krone (approximately 25.78 trillion KRW).

These impressive figures were driven by the expanded availability of Wegovy in over 15 countries and the inclusion of more U.S. patients in its insurance coverage. Wegovy, a medication that helps with weight loss, is now accessible to around 55 million Americans suffering from obesity. Lars Fruergaard Jørgensen, the CEO of Novo Nordisk, highlighted the strategic goal of building the best treatment options by focusing on the drug's effectiveness, safety, and scalability.

Despite these positive developments, Novo Nordisk's stock has faced significant volatility, with the share price dropping nearly 40% since its peak in June 2024. The key issue lies in the slowdown of growth forecasts for 2025, as the company anticipates a lower growth rate for this year. While Novo Nordisk's projected revenue growth is expected to range from 16% to 24% year-on-year (based on fixed exchange rates), and operating profit is set to increase by 19% to 27%, concerns are rising about the company's ability to manage stock price fluctuations.

The fluctuation in the company's stock price has been tied to market sentiment and concerns over the long-term growth potential of the obesity treatment market. One notable challenge was the disappointing clinical trial results of Novo Nordisk's next-generation obesity drug, “Cagrilsem,” which failed to meet the company’s ambitious goal of achieving a 25% weight loss target. This setback led to a sharp decrease in Novo Nordisk's market capitalization by approximately 90 billion euros (around 135.43 trillion KRW) in late 2024.

In response, CEO Jørgensen defended the results, emphasizing that the data still demonstrates the drug's competitive edge in the industry. He also explained that some patients in the trial did not reach the maximum dosage, clarifying that this was due to “insufficient weight loss,” not side effects. Recent positive early-stage results from another obesity drug, "Amicretin," have helped to boost investor confidence, driving the stock price up by as much as 13%.

The U.S. market remains a significant focus for Novo Nordisk, with the company investing in manufacturing facilities to cater to growing demand. In 2024, the company announced the construction of a $4.1 billion plant in North Carolina, aimed at expanding its production capacity for active pharmaceutical ingredients (APIs) and final products. Novo Nordisk's primary diabetes drug, Ozempic, will continue to be produced overseas and undergo final manufacturing processes within the U.S.

However, the broader global economic landscape is a concern for Novo Nordisk. In light of U.S. President Donald Trump's trade policies, the pharmaceutical company is preparing for potential tariffs on EU-made medicines, which could impact its operations. Novo Nordisk is also addressing shifts in the global supply chain and plans to expand its North American production as a response to these challenges.

Despite these hurdles, analysts like those from Intron Health, a UK-based healthcare research firm, remain optimistic about Novo Nordisk’s prospects. The company is expected to continue its strong growth trajectory in the long term due to its dominance in the diabetes and obesity treatment markets, alongside ongoing new drug development. While short-term stock volatility may persist, the company’s strategic investments in innovation and market expansion, particularly in the U.S., have solidified its position as a key player in the healthcare sector.

J.P. Morgan analysts have adjusted their price target for Novo Nordisk’s stock to 1000 Danish Krone (down from 1050 Krone), but maintained a “buy” rating. They remain bullish on the company’s long-term potential, citing the expanding markets for obesity and diabetes treatment as well as new drug launches as key drivers of future growth.

In conclusion, Novo Nordisk's performance in 2024 demonstrates the success of its obesity treatments, yet the company must address concerns over stock price volatility and growth slowdown in 2025. The pharmaceutical giant's ability to manage these challenges, especially in the face of global economic uncertainties and competition, will be critical to its sustained success.