Novo Nordisk (NVO) Stock Crashes 20%: What’s Behind the Sudden Drop?

2025-07-30

Novo Nordisk (NVO) experienced a dramatic drop in its stock price on Tuesday. Shares plunged more than 20% during European trading, wiping out over €60 billion in market value in just a few hours.

The sharp decline raised questions among investors and analysts: why is Novo Nordisk stock down so suddenly, and what does it mean for the company’s future?

The answer lies in a combination of disappointing financial forecasts, increasing pressure from competitors, unresolved legal battles, and a major leadership transition.

Despite strong sales and profits in the first half of 2025, Novo Nordisk revised its outlook for the rest of the year, which caught investors off guard and triggered the sell-off.

Novo Nordisk Revises Its 2025 Forecasts

Novo Nordisk stock crash.

At the heart of the stock crash is a significant revision to Novo Nordisk’s full-year earnings and sales expectations.

The company now expects sales growth between 8% and 14%, down from a previous range of 13% to 21%. Profit growth projections were also lowered from 16% to 24% to just 10% to 16%.

These downward revisions were unexpected and interpreted as a signal that the company is facing more serious challenges in the U.S. market than previously disclosed.

Investors, who had been optimistic due to the booming popularity of Novo’s weight-loss drug Wegovy and diabetes treatment Ozempic, reacted swiftly and negatively.

Competition from Eli Lilly and Compounded Drugs

One of the major issues behind the weak forecast is intensifying competition in the United States, particularly from American pharmaceutical giant Eli Lilly.

Both companies are fighting for dominance in the weight-loss drug market, where demand has surged due to rising obesity rates and growing public interest in medical weight management.

Eli Lilly’s drug Zepbound, approved for chronic weight management, has gained popularity quickly. Analysts say Lilly has a more aggressive marketing strategy in the U.S., which has allowed it to gain ground in a market where Novo Nordisk once led.

In addition to direct competition, compounded or copycat versions of Wegovy and Ozempic remain widely available in the U.S., even after emergency authorizations were withdrawn by the FDA.

These unapproved alternatives emerged during periods of drug shortages and have continued to erode Novo’s market share.

The company admitted that the persistence of compounded drugs in the market is a key factor behind the slower-than-expected adoption of its treatments.

In a statement, Novo said that "unsafe and unlawful mass compounding remains widespread," and it has begun litigation to protect patients and reclaim control over its intellectual property.

International Markets Also Show Weakness

While the U.S. remains Novo Nordisk’s most important market, signs of slowing growth have also emerged internationally. The company noted that Wegovy sales outside the U.S. have not expanded as quickly as planned, affecting global revenue forecasts.

Similarly, projections for Ozempic sales in the U.S. diabetes segment have been adjusted downward, suggesting saturation or growing competition even in its more established segments.

Despite these challenges, the company posted a solid 18% sales increase in the first half of 2025, excluding currency effects, and a 29% rise in operating profit. Still, the market appears to be more concerned about future performance rather than past achievements.

Leadership Transition Raises New Questions

The stock drop also came on the same day Novo Nordisk announced a change in leadership. The company revealed that Maziar Mike Doustdar will take over as CEO next week, replacing Lars Fruergaard Jørgensen, who is stepping down after nearly a decade at the helm.

Doustdar, an Austrian-Iranian national and a longtime Novo executive, is the first non-Danish CEO in the company’s history. He currently oversees all markets outside the U.S. and is known for his international experience and commercial strategy.

The timing of the leadership change, coming amid a stock crash and revised guidance, raised concerns about stability and direction.

However, analysts believe the decision reflects a strategic shift aimed at strengthening the company’s competitive position in the U.S., especially as Eli Lilly vs Novo Nordisk becomes an even more critical battle.

Legal Battles and Fallout with Hims & Hers

Novo Nordisk has also taken legal action to curb the sale of unauthorized compounded versions of its drugs. One high-profile dispute involved U.S.-based telehealth company Hims & Hers, which Novo accused of distributing imitation versions of Wegovy.

The company terminated its partnership with Hims & Hers last month, citing anti-competitive behavior. The telehealth firm responded by claiming Novo was trying to block fair competition.

The fallout adds to the legal complexities facing Novo, which is attempting to maintain control over its supply chain and brand reputation in a rapidly changing market.

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FAQ

What is Novo Nordisk famous for?

Novo Nordisk is well-known for producing and selling medications and devices for diabetes care. They make drugs like semaglutide, which is used for diabetes under the brand names Ozempic and Rybelsus, and for obesity under the brand name Wegovy.

What is the Novo Nordisk controversy?

Novo Nordisk Inc. agreed to pay $58.65 million to settle claims that it failed to follow FDA safety requirements (Risk Evaluation and Mitigation Strategy, or REMS) for its Type II diabetes medication, Victoza.

Is Novo Nordisk bigger than Tesla?

Yes, Novo Nordisk is currently a larger company than Tesla. Novo Nordisk has a market capitalization of $604 billion, making it the 12th most valuable company globally, while Tesla's market cap is $569 billion.