The dramatic decline of the company that produces Ozempic continues after disappointing results in tests to combat Alzheimer's
Novo Nordisk's past success has cast a long shadow over the rest of the Danish economy, PHOTO: Mads Claus Rasmussen / AFP / Profimedia
U.S.-listed shares of Novo Nordisk, the European maker of the drugs Ozempic and Wegovy, fell more than 5% on Monday to a four-year low amid disappointing results from new clinical trials looking at improving Alzheimer's disease, Fortune magazine reports.
The drop meant Novo Nordisk shares ended up trading on the New York Stock Exchange for around $45. The decline continued a downward spiral that has seen the Danish drugmaker lose nearly half of its US stock market capitalization since the start of this year.
The huge popularity of the drugs Ozempic and Wegovy due to their effects on weight loss made Novo Nordisk the most valuable company in Europe in September 2023, with a market capitalization of more than 300 billion dollars. The Danish company lost that title in March this year, when it was overtaken by German software maker SAP.
In recent months, Novo Nordisk's stock market value has fallen below 200 billion dollars, being overtaken in this regard by European pharmaceutical rivals such as AstraZeneca and Roche.
A major factor in Novo Nordisk's recent decline was the announcement that semaglutide — the main ingredient in Ozempic and Wegovy — failed to slow cognitive decline in two major Alzheimer's clinical trials.
The miracle ingredient of the Ozempic and Wegovy drugs had no noticeable effect in fighting Alzheimer's
The results of the EVOKE and EVOKE+ trials showed no significant advantage over placebo drugs, dashing hopes that the Danish firm could expand its obesity and diabetes drug division to also cover neurodegenerative conditions.
“Although treatment with semaglutide led to improvements in Alzheimer's disease biomarkers in both studies, this did not translate into a delay in disease progression,” Novo Nordisk said in a statement.
Although analysts were increasingly skeptical about the prospect of semaglutide being effective in fighting Alzheimer's, the official announcement eliminated Novo Nordisk's near-term prospects for growth based on new therapeutic indications.
Fortune magazine notes that investors are now wondering whether external acquisitions can offset underperformance in the company's research portfolio.
A recent decision by Novo Nordisk to spend $2 billion to license a weight-loss drug from China is seen by analysts as a risky bet after recent setbacks.
Novo Nordisk's market share is under increasing pressure
Novo Nordisk's outlook is also hurt by continued regulatory and price pressures, particularly as governments demand wider coverage from insurers and lower costs for obesity treatments.
Even before the disappointment caused by the Alzheimer's studies, Novo Nordisk was facing a slowdown in the pace of sales growth for its best-selling weight loss drugs Wegovy and Ozempic.
Lower prescription rates in the US and increasing competition from rivals such as Eli Lilly – whose competing drug, Zepbound, is gaining ground – have raised concerns about the sustainability of demand for Novo Nordisk's products.
The Danish company had to apply steep price cuts in the US, first by around 50% to $499, then even lower to $349, in an attempt to maintain its market position. These discounts directly affect profit margins and indicate difficulties in maintaining growth.
