The Danish company developed the most lucrative new drug the world had ever seen. Then America's Eli Lilly outmaneuvered it and took control of the diet-drug market.
In August 2024, Novo Nordisk bused its employees to the sprawling Roskilde fairgrounds outside Copenhagen for its annual summer party. The Danish company had hosted the bash for many years, but in 2024 the event roughly doubled in size to an estimated 20,000 attendees, according to local press reports, reflecting the fresh hiring of thousands of employees. Singers performed on four stages, and the festivities went on past midnight.
At Novo Nordisk, it looked like the party would never end. Weeks earlier, in June 2024, the company's stock had soared to its all-time high, valuing the drugmaker at $658 billion, according to FactSet. This company from Denmark, a country with a population of about 6 million, had again become the biggest company in Europe by market capitalization.
Novo's success was fueled by one thing: semaglutide, a medication that mimics the naturally occurring hormone in the gut that signals to the brain it's not hungry, while regulating digestion and blood sugar. Novo branded the drug Ozempic for Type 2 diabetes and Wegovy for weight loss. The U.S. Food and Drug Administration first approved Ozempic in 2017, giving Novo a nearly five-year head start on Eli Lilly, the American pharmaceutical giant racing to catch up.
Amid explosive demand for Novo's drugs, the company grew so much it propped up Denmark's entire economy. In September 2024, Novo scientist Lotte Bjerre Knudsen won a prestigious award - one that scientists often win before receiving a Nobel Prize - for her pioneering work on GLP-1s. The same month, she was feted at New York City's Lincoln Center by the American Academy of Achievement alongside Ukrainian President Volodymyr Zelensky and Boston Red Sox owner John Henry.
"It was Disney World," said a former Novo employee, speaking on the condition of anonymity. There were "three-day offsites that could have been a two-hour meeting. No one asked how much something cost."
Back at Novo's offices, some employees were starting to question the company's strategy. Ozempic and Wegovy had been first to market and sold via injector pens, but Lilly had just launched a cheaper way to distribute tirzepatide, its GLP-1 for weight loss branded as Zepbound - in vials. Some people started asking in meetings why Novo wasn't using vials, according to former Novo employees. Lilly also had its own direct-to-consumer platform in the U.S., the world's biggest market, where Americans were increasingly using credit cards or plunking down cash for weight-loss drugs. Some employees began to openly question why Novo didn't have such a platform.
Within a year, it all fell apart. Novo (DK:NOVO.B) (NVO) lost its enormous lead and Lilly $(LLY)$ took control of the biggest pharmaceutical market of all time, in 2025 becoming the first drug company with a $1 trillion market capitalization. Novo's stock price tanked, tumbling 58% in a year from its high, and the company was recently valued at $201 billion, according to FactSet. Novo's board pushed out CEO Lars Fruergaard Jørgensen, and then most of the board members resigned. The company is now led by its first non-Danish CEO, Mike Doustdar, who has started to cut the bureaucracy and bloat. Under Doustdar, Novo announced plans to let go of 11.5% of its workforce in the largest corporate layoff in Denmark's history, according to local news reports. Knudsen, the scientist who shepherded semaglutide through clinical trials, left the company this spring, along with dozens of executives.
Novo "parlayed a market-leading position in the biggest drug discovery in decades into an investment disaster," Terry Smith, chief executive of London-based asset-management company Fundsmith, wrote in a letter in July, explaining why he pulled his entire investment in the drugmaker.
"There is no question about it," said U.S. investor Steve Eisman on his podcast. "Lilly has won the diet-drug wars."
Novo struggled to manufacture sufficient supply as people clamored for its GLP-1s. And as the competitive landscape shifted, the company doubled down on semaglutide, leaving it vulnerable to Lilly's focus on several different molecules and head-to-head trials. It also failed to pivot fast enough to respond to the rapidly changing ways weight-loss drugs were being sold to Americans, analysts and former employees say, adding that Novo's complicated culture was partly to blame.
The Danish executives "have this condescending view of American healthcare," a former Novo staffer said. "They didn't know what they didn't know."
"Individual employees will have different experiences and perspectives," Ambre James-Brown, a Novo spokesperson, said in a statement. She told MarketWatch that Novo remains focused on innovative science and methods of getting medicines to people who need them. "Our focus isn't on yesterday's milestones," James-Brown said. "It's on what's next. As a global healthcare company, we take a long-term view because improving health takes long-term thinking."
Some analysts say the GLP-1 race will remain competitive as weight-loss pills and new injections are introduced to the market. Still, Novo blowing its massive lead raises fresh questions about the ability of European companies to compete in key technologies defining the global economy, financial and economic analysts say. They point to Europe's strong pharmaceutical industry legacy and signs that it may be slipping.
"Novo Nordisk has been trying for decades to be Mr. Nice Guy," said Per Hansen, an economist with Nordnet Bank in Copenhagen. "We have to adapt a little bit to U.S. competitiveness, which is very fierce."
The rise of #Ozempic and the challenges of supplying it
When the FDA approved Ozempic in 2017 and Wegovy in 2021, hardly anyone batted an eye. At that time, Wegovy was largely viewed as an alternative to stomach-shrinking bariatric surgery, which was then the only way to medically lose more than 10% of your body weight. Some analysts believed the U.S. market for obesity medications could be worth $12 billion at most.
But within seven months of Wegovy's approval, Novo announced the medication was in short supply due to an external manufacturing issue. As the company worked on shoring up its manufacturing capacity, a cultural shift was under way that neither Novo nor Lilly predicted.
"There was unbelievable interest in these drugs, and you saw demand far outweigh the ability of these companies to produce the supply," said Sarah Emond, chief executive of the Institute for Clinical and Economic Review, a U.S. drug-pricing watchdog. "We've never seen anything like this in the pharmaceutical space."
Americans became desperate for Wegovy and off-label prescriptions of Ozempic to help them lose weight. Think pieces in major media outlets described the injection as a "coveted accessory" for wealthy people and a "watershed moment for scientific discovery." In late 2022, Elon Musk posted that he lost 30 pounds by fasting and taking semaglutide. On social media, #Ozempic generated hundreds of millions of views as influencers and everyday users posted about their physical transformations. Novo, which had been selling insulin for more than a century, didn't run its first ad campaign for Wegovy until 2023.
That was partly because Wegovy remained in short supply. So did Ozempic and, later, Lilly's GIP/GLP-1 agonist, which was approved as Mounjaro for Type 2 diabetes in mid-2022 and as Zepbound for weight loss in late 2023. Both companies were unprepared for the demand. Novo CEO Doustdar told "The Journal" podcast earlier this year that the company had to figure out that people seeking weight-loss drugs were acting more like consumers than patients, paying with cash or credit cards to get prescriptions from online doctors.
"They didn't think that obesity was their market," said Evan David Seigerman, an analyst at BMO Capital Markets who covers Novo and Lilly. "Lars and the management team underinvested in manufacturing," he said, referring to the former Novo CEO.
Novo Holdings - the drugmaker's controlling shareholder - came up with an idea in late 2023 to resolve the shortages. Instead of waiting years to construct new plants, Novo Holdings spent $16.5 billion to buy a contract manufacturer called Catalent and then sold three Catalent facilities to Novo Nordisk, which paid $11.7 billion for them. At first glance, the deal was a one-and-done solution to Novo's problems: Buy a third-party pharmaceutical manufacturer with factories in the U.S. and Europe, and control your supply chain.
Except Catalent was a company that had grown fast when it ramped up to produce COVID-19 vaccines, and it came with known manufacturing issues. Catalent had already slashed its guidance, the FDA had raised concerns about contamination in some of its plants, and Lilly is a customer, creating a potential conflict of interest. (Lilly still works with Catalent, although a spokesperson described the relationship as "limited.")
The trouble didn't stop there. Federal inspectors detailed multiple instances of mammalian hair found in drugs produced at a Catalent plant in Bloomington, Ind., used in part to manufacture semaglutide. The FDA also rejected several drugs developed by other companies that are manufactured at the facility, corporate filings show.
It wasn't until early 2025 that the FDA removed semaglutide from its list of drugs in short supply. In the intervening years, however, a cottage industry of compounding pharmacies emerged, including Ro and Hims & Hers Health. If a patented drug is listed by the U.S. government as in short supply, compounders can legally produce it. Local medical spas were also illegally making or buying their own versions of the drugs and selling them to patients.
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