Market Watch: Novo Nordisk Slashes Ozempic and Wegovy Prices by Up to 50% as CagriSema Setback Deepens Competitive Crisis

Novo Nordisk's price reduction strategy is more nuanced than it appears at first glance. Unlike the company's earlier direct-to-consumer price cuts — which brought cash-pay options down to $149–$499 per month — this move specifically targets the commercially insured population whose out-of-pocket costs are tied to list prices. That's a significant and growing cohort.

As Jamey Millar, Novo's head of U.S. operations, explained, patients on high-deductible health plans effectively pay the full list price of a drug until they meet their deductible threshold. Many of these patients have been deferring treatment entirely rather than shouldering monthly costs north of $1,000. The number of Americans on high-deductible plans has steadily increased in recent years as employers and individuals trade higher deductibles for lower monthly premiums.

The timing is also strategic from a regulatory perspective. New Medicare negotiated prices under the Inflation Reduction Act will take effect for Wegovy, Ozempic, and Rybelsus in 2027, bringing the government price down to $274 per month. By proactively cutting commercial list prices, Novo is attempting to harmonize its pricing narrative and preempt further political pressure on drug costs. The company is also escalating its pricing war with Eli Lilly, which has yet to make comparable reductions to the list prices of Zepbound or Mounjaro, though Lilly has aggressively pursued the direct-to-consumer market — most recently launching a new KwikPen multi-dose device for Zepbound at $299 per month through LillyDirect.

If the price cut represents Novo playing defense on the commercial front, the CagriSema trial failure is a genuine strategic crisis. CagriSema — a combination of semaglutide (the active ingredient in Ozempic and Wegovy) and cagrilintide — was supposed to be Novo's answer to the superior weight-loss efficacy of Lilly's tirzepatide-based drugs. In the REDEFINE-4 head-to-head trial, CagriSema failed to demonstrate non-inferior weight loss against Zepbound, a result that has prompted downgrades from two major investment banks.

The implications are profound. Novo's entire next-generation obesity strategy was predicated on CagriSema leapfrogging or at least matching Lilly's drugs. Without that competitive answer, Novo's semaglutide franchise — while still generating enormous revenue — faces a slow erosion of market share in the highest-growth segment of pharma. Lilly's Zepbound posted $4.2 billion in U.S. revenue in Q4 2025 alone, a 122% year-over-year increase, and has already seized majority market share in the GLP-1 weight-loss category.

There is a counterargument, however. Seeking Alpha analysts have argued the market is overreacting to the CagriSema setback, pointing to Novo's oral Wegovy pill as a potentially transformative growth driver. An oral formulation of a GLP-1 drug could dramatically expand the addressable patient population by removing the injection barrier. If Novo can gain regulatory approval for its oral semaglutide obesity treatment, it could reopen a significant competitive front that Lilly has yet to match.

The disconnect between Novo Nordisk's fundamental performance and its stock price has become extraordinary. In Q4 2025, Novo reported revenue of DKK 78.4 billion (approximately $11.2 billion) with a gross profit margin of 80.9% and a net income margin of 34%. For the full year 2025, total revenue across all four quarters exceeded DKK 308 billion, with net income of DKK 102.4 billion — generating DKK 119.1 billion in operating cash flow.

Yet the market has repriced NVO as if the business is in structural decline. At $38.58 per share, Novo trades at a P/E of just 10.5x trailing earnings — a stunning discount for a company with 80%+ gross margins, category-leading drugs, and a massive global diabetes franchise. By comparison, Eli Lilly trades at 46x earnings with a market capitalization of $996 billion — nearly six times Novo's $172 billion valuation. Novo's price-to-book ratio has collapsed from 15x in Q1 2025 to 7.4x in Q4, while its enterprise value-to-EBITDA has fallen to just 41.6x from 47x.

The valuation gap is stark. Even accounting for Lilly's faster revenue growth and superior competitive position in weight loss, paying 46x earnings for Lilly versus 10.5x for Novo implies the market expects a near-complete transfer of GLP-1 dominance — a scenario many analysts consider overly pessimistic given Novo's entrenched diabetes franchise and global market presence.

Novo's 50% price reduction doesn't happen in a vacuum — it's the latest salvo in an escalating pricing war that is fundamentally reshaping the economics of the GLP-1 market. Both Novo and Lilly struck landmark 'most favored nation' deals with the Trump administration in November, committing to preferential government pricing. Medicare's negotiated prices for 2027 will bring Novo's drugs down to $274 per month through that channel.

The question investors must grapple with is whether aggressive pricing erodes or expands the profit pool. Novo is betting on volume: by lowering the price barrier for the estimated millions of commercially insured patients who have been priced out of treatment, the company hopes to dramatically expand its user base. The obesity drug market, after all, is still in its infancy — only a fraction of eligible patients are currently on GLP-1 therapies.

But the margin impact could be significant. Novo's gross profit margin has fluctuated between 76% and 83% across 2025 quarters, and a sustained reduction in realized prices — even if partially offset by lower rebate obligations — will pressure the bottom line. Analyst estimates for 2027 project average quarterly EPS of roughly $5.37, which would represent a modest decline from 2025 levels if the price cuts take full effect. The company has not provided specific guidance on how the pricing changes will affect revenue or margins.

Several catalysts will determine whether Novo Nordisk's current valuation represents a deep-value opportunity or a justified repricing. First, the trajectory of Novo's oral semaglutide obesity program is now the most important pipeline asset in the company. If the oral Wegovy pill can achieve strong efficacy data in late-stage trials, it would represent a differentiated competitive advantage that Lilly cannot immediately replicate.

Second, investors should monitor the actual uptake impact of the 2027 price reductions. Novo has declined to provide specific volume forecasts, but if the lower prices meaningfully expand the commercially insured patient base, the volume-for-price trade could prove accretive to total revenue. The company's next earnings report on May 6 will be the first opportunity for management to address the combined impact of the CagriSema failure, the pricing strategy, and the competitive dynamics.

Third, Eli Lilly's response will be critical. Lilly has dominated the direct-to-consumer market and has yet to cut list prices on Zepbound or Mounjaro for commercially insured patients. If Lilly matches Novo's reductions, the entire GLP-1 sector faces margin compression. If Lilly holds firm, Novo could gain a meaningful pricing advantage in the commercial insurance channel, potentially slowing market share losses. Lilly's Q4 2025 revenue of $19.3 billion and 85% gross margins give it significant financial firepower to wage a prolonged pricing battle.