Deutsche Bank downgrades Novo Nordisk to Sell

Deutsche Bank downgraded Novo Nordisk from Hold to Sell and lowered its price target to 265 Danish kroner from 290 kroner, sending the company’s shares down about 2% in US trading on Thursday.

The bank reduced its mid-term revenue estimates after Ziltivekimab failed to lower the risk of heart attack or stroke in a late-stage cardiovascular study. Deutsche Bank wrote that the trial result removes the drug from its growth projections.

The downgrade also reflected rising competition in the obesity-drug market and increased availability of lower-cost or copycat versions of Ozempic and Wegovy. Deutsche Bank flagged pressure on pricing, particularly in the US, as a factor weighing on revenue outlooks.

Deutsche Bank analyst Emmanuel Papadakis noted that any sales boost from expanded Medicare coverage of weight-loss drugs in the US is likely to be limited. He highlighted uncertainty about whether Novo Nordisk can return to meaningful growth by 2027 and pointed to patent expirations as an additional long-term challenge.

Novo Nordisk’s shares have fallen roughly 70% from their June 2024 peak and are trading below a 52-week high of 410 Danish kroner, though they have recovered from a 52-week low of 224.3 kroner.

Competition from Eli Lilly intensified after Lilly’s oral weight-loss treatment won its first European regulatory approval in August. Both companies are developing oral GLP-1 therapies, which adds pressure on pricing and market share for injectable brands such as Wegovy.

Novo Nordisk has been working to broaden its product mix beyond diabetes and obesity into related disease areas. The Ziltivekimab setback and other pipeline developments have raised questions about the timeline for new products to contribute meaningfully to sales.

Policy changes have also affected pricing expectations. A deal reached under the previous US administration to lower drug prices in exchange for wider federal coverage of weight-loss medicines has been cited as adding uncertainty over future US pricing.

Novo Nordisk said Chinese regulators accepted its application to market a Wegovy weight-loss pill in China; Wegovy already has approvals in the US, UK, EU, United Arab Emirates and Bahrain. The company is preparing for an investor update next month that firms including JP Morgan expect will cover the pipeline, next-generation obesity and diabetes candidates, and broader strategic plans.

The investor event is likely to provide more detail on product plans and timing. Market analysts continue to point to unresolved questions about when and how quickly Novo Nordisk might rebuild growth after recent setbacks.