Novo Looks Beyond GLP-1s as Competition Intensifies

In the past, Novo Nordisk A/S (NYSE:NVO) has been a dominant player in diabetes and obesity treatments, with Ozempic and Wegovy driving a significant portion of the company’s recent growth. Those drugs transformed the company into one of the pharmaceutical industry’s biggest winners. However, as competition intensifies, the company has started to lose market share to another drug company known as Lilly.

The fear of losing has made the company diversify its business. Recently, Novo started exploring opportunities in the hair-loss market, which highlights that shift. Chief Scientific Officer of Novo believes the company can use its scientific knowledge to move into that niche. However, investors may argue whether these emerging opportunities can eventually develop into meaningful businesses or the company will remain heavily dependent on its obesity franchise.

Novo Nordisk Just Beat Lilly in a Trial. Is the Comeback Finally Taking Shape?

Novo Looks to Diversification for Its Next Growth Phase

Novo Nordisk recently outlined its long-term growth strategy. The company aims to launch more than five potential blockbuster drugs by 2030 and generate over $23 billion in pipeline-related sales by 2035. This shows that the company is not relying solely on its existing obesity and diabetes portfolio. Moreover, the company plans to advance multiple Phase 3 programs across obesity, diabetes, and other therapeutic areas. Novo is also exploring opportunities beyond its current focus, including the hair-loss market. The company believes it is a large market with limited treatment options. A successful entry into this market could provide Novo with potential long-term growth opportunities. If Novo successfully expands beyond its current obesity franchise, the company could maintain growth even as the GLP-1 market becomes more competitive.

Novo Nordisk is looking beyond obesity for its next growth engine. See where the company is searching for growth next.

Diversification May Not Be Enough to Offset GLP-1 Pressure

Despite planning to diversify, the company noted it will have to face challenges. After Novo laid out its post-Wegovy growth strategy, hair-loss drug developers Veradermics and Absci traded higher. CEO Mike Doustdar remarked,

Confidence is gone, as shown yesterday by the reaction, and it takes time and hard work to build that back. We need to start somewhere, and then we need to search everywhere.

Similarly, the company has lost out to its main rival, Lilly, in the injectable GLP-1 market. The companyalso faces a longer-term challenge as key semaglutide patents protecting Ozempic and Wegovy expire in major markets in the early 2030s. Moreover, the bears may argue that the company’s diversification efforts may take years to generate meaningful revenue. As a result, Morgan Stanley recently downgraded Novo to Sell, citing concerns about medium-term growth and the company’s reliance on semaglutide-based products. The firm also highlighted the risk posed by future patent expirations in the early 2030s. From here, it can be noted that the key question is not whether Novo can enter markets such as hair loss, but whether these opportunities can eventually replace the earnings power of Ozempic and Wegovy.

From a valuation perspective, Novo appears significantly cheaper than its historical levels. The stock currently trades at around 10.2x forward GAAP earnings, well below its five-year average of 30.0x and the sector median of 23.3x. Its forward price-to-sales ratio of 3.8x is also below its five-year average of 9.6x, although it is broadly in line with the sector median of 3.7x. This suggests that much of the recent concern around slower growth and rising competition may already be reflected in the stock’s valuation. However, the discount also reflects real risks, including stronger GLP-1 competition, future patent expirations, and uncertainty around the company’s pipeline.

According to our database, the number of hedge funds holding NVO increased to 59 at the end of Q2 2026 from 55 at the end of the first quarter of fiscal 2026. While the increase was modest, it reflects a continued expansion in institutional interest.

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