Novo Nordisk’s NVO shares lost 5.3% on Friday after Medicare issued a press release selecting the company’s popular semaglutide medicines as one of the 15 additional drugs covered under Medicare Part D for the second round of price negotiations in 2025. Novo Nordisk markets its semaglutide medicines as Ozempic pre-filled pens and Rybelsus oral tablets for type II diabetes (T2D) and Wegovy injections for weight management.
Any price reduction resulting from the impending negotiations will become effective in 2027. For continued coverage of its semaglutide medicines under Medicare, NVO has until Feb. 28, 2025, to decide if it will participate in negotiations or pay a large tax on U.S. sales of the drugs. Either way, investors anticipate a decline in the company's profit margins resulting in the stock price decline. The Inflation Reduction Act allows Medicare to negotiate the prices of certain prescription drugs to make them more affordable for seniors and people with disabilities.
Medicare stated that, from November 2023 to October 2024, approximately 5.3 million Medicare Part D beneficiaries used these 15 selected drugs to treat conditions like cancer, T2D and asthma. During the same period, these drugs accounted for around $41 billion, or 14%, of the total gross covered prescription drug costs under Medicare Part D.
In the past three months, Novo Nordisk’s shares have plunged 32.9% compared with the industry’s 16.6% decline.
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Please note that shares of NVO’s archrival in the obesity space, Eli Lilly LLY, also declined 4.2% on Friday, although none of its drugs were selected for the second round of price negotiations. Eli Lilly markets its tirzepatide medicines, Mounjaro for T2D and Zepbound for obesity, which competes with NVO’s Ozempic and Wegovy. The fall in LLY’s stock price is likely because investors also anticipate the selection of its tirzepatide medicines by Medicare for price negotiations in the future.
In 2023, Medicare selected 10 drugs for its first round of price negotiations. Agreements were reached with drug manufacturers to establish new, reduced prices for all 10 drugs. These prices, reflecting discounts of 38% to 79% off list prices, will take effect on Jan. 1, 2026.
NVO’s Higher Dose Semaglutide Outshines Wegovy in Obesity Study
In its latest press release, Novo Nordisk announced topline data from a late-stage study evaluating the efficacy and safety of once weekly, subcutaneous semaglutide 7.2 mg compared with Wegovy and placebo in adults with obesity.
Per the data readout, the phase IIIb STEP UP study met its primary endpoint by demonstrating a statistically significant and superior weight loss at week 72 with semaglutide 7.2 mg versus placebo.
Analysis of the data, assuming all people adhered to treatment, revealed that patients starting with a mean baseline weight of 113 kg experienced a superior weight loss of 20.7% after 72 weeks with semaglutide 7.2 mg, compared to 17.5% with Wegovy and 2.4% with placebo. Furthermore, 33.2% of those on semaglutide 7.2 mg achieved at least a 25% weight loss after 72 weeks, compared to 16.7% on Wegovy and none on placebo.
Regardless of treatment adherence, it was observed that people treated with semaglutide 7.2 mg achieved a superior weight loss of 18.7% compared to a reduction of 15.6% with Wegovy and 3.9% with placebo. Additionally, the candidate demonstrated a safe and well-tolerated profile. Adverse events related to treatment were mostly mild to moderate in severity and diminished over time, consistent with the GLP-1 receptor agonist class.
Novo Nordisk expects to share detailed results from the phase IIIb STEP UP study of semaglutide 7.2 mg for obesity at a medical conference later in 2025. The company also expects to share results from the second phase III study, STEP UP T2D, of semaglutide 7.2 mg for adults with T2D and obesity, in the next few months.
Novo Nordisk A/S Price and Consensus
Novo Nordisk A/S price-consensus-chart | Novo Nordisk A/S Quote
NVO’s Zacks Rank & Stocks to Consider
Novo Nordisk currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the sector are Castle Biosciences CSTL and BioMarin Pharmaceutical BMRN, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, Castle Biosciences’ earnings estimates for 2024 have remained constant at 34 cents per share. During the same timeframe, loss per share for 2025 has remained constant at $1.84. In the past three months, shares of Castle Biosciences have plunged 21.7%.
CSTL’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 172.72%.
In the past 30 days, estimates for BioMarin Pharmaceutical’s 2024 earnings per share have improved from $3.28 to $3.29. Estimates for 2025 earnings per share have decreased from $4.05 to $4.02 during the same timeframe. In the past three months, BioMarin Pharmaceutical shares have lost 12.5%.
BMRN’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 28.7%.
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