US Legislative Proposal Offers Respite for Novo Nordisk Amid Market Challenges

In a year marked by significant stock market declines, Novo Nordisk has received unexpected support from an unlikely source: US policymakers. A newly introduced bill in Washington targeting copycat versions of GLP-1 drugs could help stabilize revenue for the blockbuster weight-loss medication Wegovy. This development arrives as competitor Eli Lilly intensifies pressure in the lucrative obesity treatment sector with compelling clinical trial results.

A draft law known as the "SAFE Drugs Act," presented in the US House of Representatives, sparked a share price recovery for the Danish pharmaceutical giant on Thursday. The bipartisan effort, led by Representatives Rudy Yakym (Republican) and Andre Carson (Democrat), seeks to impose strict limitations on a current regulation that permits compounding pharmacies to operate.

These pharmacies have been producing unapproved replicas of approved GLP-1 medications on a large scale, including versions of Novo Nordisk's Wegovy. Industry estimates suggest over one million patients in the United States now use these cheaper alternatives, applying noticeable pressure on the profit margins and market share of the original patent holders.

Should the legislation pass through Congress as proposed, this "grey market" would be substantially reduced. The likely outcome would be a channeling of demand back toward the branded originator products, a shift from which Novo Nordisk and its Wegovy franchise would stand to benefit. This prospect provided the stock with some relief following an extended period of weakness.

Eli Lilly Competition Intensifies with New Data

The recovery, however, was not without headwinds. On the same day, Eli Lilly released Phase 3 data for its next-generation obesity treatment, retatrutide. In the TRIUMPH-4 study, patients on the highest dose achieved an average weight reduction of 28.7% over 68 weeks—a result that surpasses current benchmarks in the market.

While Eli Lilly's shares gained nearly 3% on the news, Novo Nordisk managed to hold onto its gains. This suggests investors are, for now, assigning greater weight to the potential protection of existing Wegovy revenues via the US bill than to the medium- to long-term competitive threat from Lilly's pipeline. Nevertheless, the competitive tension within the duopoly controlling modern obesity therapies remains palpable.

In a related strategic move, Novo Nordisk announced a collaboration with the Indian health-tech company Healthify. The partnership aims to improve treatment adherence among obesity patients, a component seen as crucial for securing the commercial success of these drugs and reducing treatment discontinuation.

Analyst perspectives present a mixed view:
* Berenberg maintains a "Buy" rating with a price target of $62.
* An analyst on the Seeking Alpha platform, however, downgraded the stock to "Hold," citing structural challenges.
* SEB Bank forecasts negative organic growth for the coming year.

Should investors sell immediately? Or is it worth buying Novo Nordisk?

A Challenging Period for the Pharmaceutical Firm

Despite the positive market reaction to the legislative news, 2025 continues to be a difficult year for Novo Nordisk's equity performance. Measured in euros, the share price is down approximately 50% since the start of the year. Yesterday's closing price of €42.83 remains just above its 52-week low of €39.05 and is far from the December 2024 high of €104.08.

This pronounced loss of confidence is primarily linked to repeated guidance reductions. In its Q3 report dated November 5, 2025, management cut its outlook for the fourth time this year, now projecting only 4% to 7% operating profit growth. From the market's perspective, this has transformed the stock from a former growth star into a more mature value with limited momentum, one that must defend its position in a tight duopoly while managing supply constraints.

This reassessment is reflected in the company's valuation: the stock currently trades at a forward P/E ratio of around 13.7—a historically low multiple for a firm that delivered above-average growth for years.

Outlook: Legislation as a Potential Catalyst

What factors are likely to influence the share price most in the coming months? The progression of the SAFE Drugs Act will be critical. The clearer it becomes that the draft legislation will pass through Congress, the more the market may price in the potential stabilization of Wegovy sales in the United States.

From a technical analysis standpoint, the area just above €40 acts as a first level of support. The stock is also trading roughly 19% below its 200-day moving average, underscoring the predominant weak trend. With a 14-day RSI of 34.8, the shares are approaching oversold territory without definitively entering it.

The fundamental picture remains ambiguous:
* The average analyst consensus price target stands at $54.25, suggesting moderate upside potential of about 8%.
* Conversely, Zacks Investment Research currently assigns a rank of 5 ("Strong Sell"), a stance notably more negative than the generally positive analyst view.

With no major financial reports scheduled before the end of 2025, the short-term direction will likely be determined by news on regulatory developments, fresh clinical data from competitors, and indications regarding the actual market performance of GLP-1 therapies.