GLP-1 Therapy Penetration And Global Launches Will Unlock Market Potential

Key Takeaways

• Vast global demand for GLP-1 therapies and metabolic disease treatments offers long-term revenue growth, as adoption and access increase amid rising obesity and aging trends.
  
• Expanded product launches, manufacturing investments, and innovation in new disease areas are set to boost market reach, support resilient earnings, and reduce supply constraints.
  
• Growing pricing pressures, generic competition, and rising costs threaten margins, revenue growth, and earnings stability despite Novo Nordisk's leadership in obesity and diabetes therapies.

Catalysts

Engages in the research and development, manufacture, and distribution of pharmaceutical products in Europe, the Middle East, Africa, Mainland China, Hong Kong, Taiwan, North America, and internationally.

• Despite current headwinds, penetration of GLP-1 therapies in both diabetes (only 7% of prescriptions) and obesity (less than 1% of those affected globally treated with branded medications) remains extremely low, suggesting a vast untapped patient pool that could drive significant long-term revenue growth as access and adoption increase.
  
• Accelerating product launches and label expansions for drugs like Wegovy and Ozempic, combined with rollout in new international markets (Wegovy now in 35 countries), positions Novo Nordisk to capture expanding global demand tied to the rise in metabolic diseases and aging populations, underpinning future topline growth.
  
• Improved manufacturing capacity, reflected by rapid scale-up and investments in production, is expected to alleviate past supply constraints and support higher product volumes, contributing to stronger future revenue and margin growth as global access improves.
  
• Ongoing innovation in adjacent areas (e.g., MASH/NASH, rare diseases, cardiovascular, new oral and injectable pipelines) and continued investment in R&D and commercial infrastructure diversify revenue streams and reduce volatility, supporting more resilient long-term earnings.
  
• Broader regulatory acceptance and reimbursement for obesity/metabolic disease treatments, as well as expanding direct-to-patient and telehealth channels (e.g., NovoCare Pharmacy), are set to lower barriers to adoption, enabling sustained market penetration and supporting both revenue and net margin expansion in the years ahead.

Novo Nordisk Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Novo Nordisk's revenue will grow by 8.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 35.6% today to 35.9% in 3 years time.
• Analysts expect earnings to reach DKK 142.5 billion (and earnings per share of DKK 32.15) by about September 2028, up from DKK 111.1 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting DKK161.8 billion in earnings, and the most bearish expecting DKK113.8 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 16.7x on those 2028 earnings, up from 14.6x today. This future PE is greater than the current PE for the US Pharmaceuticals industry at 14.6x.
• Analysts expect the number of shares outstanding to decline by 0.2% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 4.92%, as per the Simply Wall St company report.

Novo Nordisk Future Earnings Per Share Growth

Risks

• Increasing price erosion for key products, particularly Wegovy and Ozempic in the U.S. due to expanding cash channels and targeted promotional efforts, may compress net margins and limit revenue growth, as evidenced by lower realized prices and channel mix headwinds highlighted for H2 2025 and beyond.
  
• Persistent and unlawful mass compounding of GLP-1 products in the U.S. undermines brand uptake, limits Novo Nordisk's prescription volumes, and pressures pricing-leading to lower-than-expected penetration of branded therapies and potential future revenue and profit loss.
  
• Upcoming patent expiries and loss of exclusivity in select international markets, combined with the anticipated launch of generic semaglutide in China next year, signal a growing risk of biosimilar or generic competition, which is likely to significantly erode both revenue and net margins over time.
  
• Ongoing high capital expenditures for manufacturing capacity expansion, alongside rising distribution and administration costs, have led to declining free cash flow and lower gross margins, introducing risk to earnings quality if future top-line growth disappoints or demand becomes more volatile.
  
• Slower-than-expected volume growth in core U.S. obesity and diabetes markets, as shown by reduced growth outlooks and guidance downgrades, raises the risk that Novo Nordisk's long-term growth projections are overestimating addressable market penetration-jeopardizing sustained revenue growth and increasing potential for negative earnings surprises.

Valuation

• The analysts have a consensus price target of DKK465.3 for Novo Nordisk based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of DKK620.0, and the most bearish reporting a price target of just DKK340.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be DKK396.7 billion, earnings will come to DKK142.5 billion, and it would be trading on a PE ratio of 16.7x, assuming you use a discount rate of 4.9%.
• Given the current share price of DKK364.65, the analyst price target of DKK465.3 is 21.6% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.