This story starts with a love story and a lab. In 1922, a Danish couple flew across the Atlantic in search of a miracle drug. They came back with insulin and changed medicine forever.
What followed was a biotech arms race that lasted six decades, ending in a merger and the birth of a juggernaut: Novo Nordisk.
Novo Nordisk is a global healthcare company engaged in diabetes and obesity care.
One of their key treatments is GLP-1 drugs—innovative medicines that work like a natural hormones to lower blood sugar, curb appetite and aid weight loss while also supporting heart and brain health.
Now it’s more than insulin. It’s GLP-1s. It’s AI-powered drug discovery. It’s a €10 billion global manufacturing empire producing life-changing medications for 45 million people in 168 countries.
Sometimes, the best businesses go on sale. That’s what’s happening with Novo Nordisk right now.
Howard Marks, in his book Mastering The Market Cycle: Getting the Odds on Your Side, suggests that,
“To succeed, you really need three things: to be aggressive, have good timing, and possess skill. If you’re aggressive enough at just the right time, you might not even need a ton of skill.”
The stock just dropped over 20% not because the business is broken, but because expectations got ahead of reality. And for long-term investors, that’s often the moment to lean in.
The Engine: GLP-1 Dominance
- Owns 55% of the global GLP-1 market
- Ozempic (diabetes) and Wegovy (obesity) are modern blockbusters.
- GLP-1 drugs are now a major contributor to Denmark’s GDP.
- Think of drugs like CagriSema potentially delivering 20–22%+ weight loss, rivaling the results of surgery.
But here’s what’s important: only ~6% of diabetics are on GLP-1s today. The runway is long, and Novo is miles ahead.
Why the Stock Crashed
Although Novo Nordisk reported an impressive 18% sales growth and 29% operating income growth in the first half of 2025, the company has revised its full-year guidance downwards. The new projections are:
- Sales growth: 8–14% (midpoint: 11%)
- EBIT growth: 10–16% (midpoint: 13%)
The market panicked. But context matters:
- U.S. obesity growth slowed due to cheaper compounded GLP-1s
- Wegovy underperformed internationally
- Ozempic growth is decelerating amid rising competition
Novo is actively fighting back—with litigation, direct-to-consumer strategies (like Wegovy for $499/month via NovoCare), and global launches in 25 new countries this year.
Scaling for the Future
This isn’t a company resting on past success:
- Invested €10B+ in manufacturing expansion
- $24B+ invested in U.S. production over the last decade
- Acquired Catalent facilities to control quality and scale
Financial Powerhouse
- Gross margin: 84% | Net margin: 36% | FCF: $12B
- ROIC: 29% | ROE: 81% | Cash Conversion: 96%
- Debt/Equity: 0.6x | Interest cover: 19x
And now the valuation’s reset: 12x forward earnings, which is the cheapest in the last five years.
That’s a 15% margin of safety by DCF, while Eli Lilly trades at a premium.
My view? Still growing. Still dominant. Just cheaper.
What Could Go Wrong?
- Eli Lilly, Amgen, and Roche are closing in.
- Regulatory scrutiny is on the rise, especially in the U.S.
- Novo Nordisk faces U.S. pricing risks, particularly with Secretary Kennedy’s “Make America Healthy Again” (MAHA) initiative, given 56% of its revenue comes from the U.S.
But here’s the thing: Novo’s problems are fixable. Its pipeline is deep, its moat is wide, and its business is recurring.
Novo is at the heart of a global shift in how we treat obesity, diabetes, and cardiovascular disease not as separate issues, but as one metabolic crisis. And it’s building an AI-powered, biotech-led innovation platform to lead this transformation.
- AI hub in London
- Cambridge Innovation Partnerships (driving breakthrough science and external collaborations).
- Open science model attracting top global talent
According to Morgan Stanley, the obesity drugs alone are a $135B+ future market. Novo is positioned to take the lion’s share.
The global diabetes drug market is projected to expand significantly, driven by increasing rates of obesity and a type 2 diabetes epidemic worldwide.
Fortune Business Insights forecasts a compound annual growth rate (CAGR) of 12.7%, with the market size expected to surge from $88.32 billion in 2024 to $233.84 billion by 2032.
Rare diseases are finally attracting real science and funding. Cardiovascular care is converging with obesity and diabetes treatment.
Yes, the stock is down. But this is Novo Nordisk—still a category-defining company, still compounding and now trading at a bargain.
With long-term tailwinds in obesity drugs, personalised medicine and global healthcare access, we see this as one of the most compelling opportunities in the market.
Awet Ghirmay, Head of Investment Research
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Risk warnings
The value of investments and the income derived from them may fall as well as rise. You may not get back what you invest. This communication is for general information only and is not intended to be individual advice. You are recommended to seek competent professional advice before taking any action. All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and HM Revenue and Customs practice. Levels and bases of tax relief are subject to change. This blog is based on my own observations and opinions.
