Novo's $1,349 Shot Just Got Squeezed: Is Lilly Winning the Weight-Loss War?

This article first appeared on GuruFocus.

Novo Nordisk's (NYSE:NVO) stock story has flipped from glory to grind. The Danish pharma giant once Europe's most valuable company is now fighting to regain altitude after trimming its full-year earnings forecast for the fourth time. The culprit: cheaper copycats, tougher rivals, and a new U.S. price-cut deal under President Donald Trump's drug affordability push. Novo's weight-loss drugs Ozempic and Wegovy, which turned semaglutide into a global phenomenon, could face slower growth next year as part of that agreement to lower prices for Medicaid and Medicare. The trade-off, though, might soften the blow Novo will get faster FDA approval for its high-dose Wegovy and a three-year exemption from import tariffs, while expanded Medicare coverage could widen access to its treatments.

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Eli Lilly (NYSE:LLY) is now the one setting the pace. Its tirzepatide-based obesity drug Zepbound, launched two years after Wegovy, has not only matched but surpassed it in clinical outcomes and sales momentum. Analysts expect Zepbound's revenue to surge to around $12.8 billion this year, outpacing Wegovy's $11.9 billion. Novo's early lead has also been eroded by the flood of compounded knockoffs that sell for a fraction of its list price some under $200 a month versus Wegovy's $1,349. Even after the FDA declared the semaglutide shortage over, compounding pharmacies have kept selling altered versions that skirt regulations. Novo estimates that more than a million Americans are using these unauthorized alternatives and has gone to court to stop them, echoing similar moves by Lilly.

New CEO Mike Doustdar is trying to reset the narrative. His playbook: cost discipline, pipeline reinvention, and strategic dealmaking. Novo is now circling startup Metsera, whose amylin-based obesity drug could offer fewer injections and milder side effects. The company also plans to roll out an oral version of Wegovy early next year a potential game-changer if it clears FDA hurdles. Still, its next-generation injectable, CagriSema, has fallen short of expectations. For now, Novo is caught in transition: balancing political pressure on pricing with the need to reignite innovation in a market it once defined. Investors will be watching whether Doustdar's recalibration can restore Novo's weight-loss dominance or if the momentum has permanently shifted to Lilly.

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