Novo Nordisk: A global leader in obesity and diabetes therapies

Novo Nordisk is a global healthcare company best known for its leading role in diabetes and obesity treatment. Over decades, it has built a strong position through insulin therapies and more recently through GLP-1 medicines such as Ozempic and Wegovy, which have reshaped how obesity and type 2 diabetes are treated worldwide. As obesity and related metabolic diseases become some of the biggest health challenges globally, Novo Nordisk operates in a market with strong long-term growth but also rising competition and pricing pressure. Supported by deep scientific expertise, large investments in manufacturing, and an expanding portfolio of treatments and delivery formats, the company is working to extend its leadership well beyond today’s products. The question remains: Does Novo Nordisk deserve a place in a long-term investment portfolio?

This is not a financial advice. I am not a financial advisor and I only do these post in order to do my own analysis and elaborate about my decisions, especially for my copiers and followers. If you consider investing in any of the ideas I present, you should do your own research or contact a professional financial advisor, as all investing comes with a risk of losing money. You are also more than welcome to copy me. 

For full disclosure, I should mention that I do own any shares in Novo Nordisk at the time of writing this analysis. If you would like to copy or view my portfolio, you can find instructions on how to do so here. If you want to purchase shares or fractional shares of Novo Nordisk, you can do so through eToro. eToro is a highly user-friendly platform that allows you to get started on investing with as little as $50.

The Business

Novo Nordisk is a global healthcare company built around treating serious chronic diseases at scale, with diabetes and obesity at the core of its operational and financial identity. Over more than a century, the company has evolved from a regional insulin producer into the world’s leading specialist in cardiometabolic health, supported by pioneering work in GLP-1–based therapies. Its long-term orientation is reinforced by an ownership structure in which the Novo Nordisk Foundation controls the company through Novo Holdings, giving management the freedom to prioritize multi-decade scientific progress and large-scale manufacturing investments over short-term financial optimization. The business is organized around two main areas. Diabetes and obesity care accounts for the vast majority of revenue and strategic focus, serving a global customer base that includes public healthcare systems, private insurers, and self-pay patients. Within this segment, Novo Nordisk operates a broad portfolio of delivery formats, spanning injectable pens and oral formulations. Its flagship molecule, semaglutide, is commercialized across multiple brands and indications, allowing the company to tailor access, pricing, and channel strategies across markets. The United States remains the most important geography, historically contributing more than half of total revenue, while international markets provide long-term volume growth. Alongside this core business, the company maintains a presence in rare blood and endocrine disorders, an area that leverages deep expertise in protein engineering and adds diversification. Novo Nordisk is also expanding into adjacent cardiometabolic conditions such as cardiovascular disease and metabolic dysfunction-associated steatohepatitis. This reflects a deliberate evolution from being viewed primarily as a diabetes company toward becoming a broader cardiometabolic health platform. Throughout this transition, the company remains anchored in a patient-first mindset that shapes decisions across the entire value chain, from molecule design and device engineering to pricing approaches, access programs, and capacity expansion. Success is increasingly measured by how many additional people gain access to treatment, rather than by revenue growth alone, with nearly 46 million patients treated today. The company’s competitive moat comes from a combination of scale, manufacturing strength, a wide range of products and delivery formats, deep knowledge of metabolic diseases, strong market access capabilities, and a long-term ownership structure. Scale matters most. Treating chronic diseases requires the ability to produce enormous volumes of medicine, distribute them globally, and work within complex healthcare and reimbursement systems. Novo Nordisk has invested at a level few competitors can match, which allows it to serve different patient groups across countries and price points while maintaining reliable supply and high quality. This approach reflects its long-standing leadership in insulin, where the company offers many formulations not because they work dramatically differently, but because different patients, healthcare systems, and affordability constraints require different solutions. Breadth across products and delivery formats further strengthens the company’s position. Rather than relying on a single product or presentation, Novo Nordisk uses the same underlying biology across different brands, dosages, and delivery formats. This gives the company flexibility to serve different patient groups, work across reimbursement systems, and price products appropriately in each market. It also makes the business more resilient by reducing reliance on any single product, indication, or commercial channel. Supporting this breadth is a deep and cumulative understanding of metabolic diseases. Decades of focused research, clinical development, and real-world patient data have built knowledge that is difficult for competitors to replicate. This insight informs how medicines are designed, how side effects are managed, and how treatments are improved over time, allowing Novo Nordisk to innovate repeatedly rather than depend on one-off breakthroughs. The company’s governance and culture further reinforce durability. Foundation ownership encourages long-term decision-making, while a consistent focus on patient outcomes shapes priorities across research, manufacturing, and commercial execution. Novo Nordisk’s history has included setbacks and periods of change, but its ability to adapt, reinvest, and continue innovating through competitive and regulatory shifts has been a defining strength.

Management

Maziar Mike Doustdar serves as the CEO of Novo Nordisk, a role he assumed in August 2025 after more than three decades with the company. He brings deep operational experience and a rare level of institutional knowledge, having spent his entire professional career at Novo Nordisk and played a central role in expanding the company’s presence across global markets. His appointment reflects continuity and long-term thinking, both of which have long characterized Novo Nordisk’s leadership culture. Maziar Mike Doustdar began his career at Novo Nordisk in 1992 as an office clerk in Vienna, Austria, and steadily advanced through roles spanning finance, information technology, logistics, operations, and commercial leadership. His progression through the organization was shaped by repeated international assignments, giving him first-hand exposure to diverse healthcare systems, reimbursement models, and regulatory environments. This broad experience has informed his pragmatic, execution-focused leadership style. Prior to becoming CEO, Maziar Mike Doustdar served as Executive Vice President of International Operations, where he oversaw Novo Nordisk’s business outside North America. Under his leadership, international sales more than doubled, driven by strong growth across Europe, Asia, the Middle East, and Latin America. He was widely credited with strengthening the company’s commercial footprint in emerging markets while maintaining operational discipline and building strong local leadership teams. Throughout his career, Maziar Mike Doustdar has been recognized for his deep understanding of global healthcare systems and his hands-on approach to leadership. He is often described as data-driven and accountable, with a focus on execution and long-term value creation. These qualities are particularly important as Novo Nordisk moves from a period of exceptional expansion to one centered on sustaining growth, scaling manufacturing capacity, and defending market leadership in diabetes and obesity care. As CEO, Maziar Mike Doustdar is expected to prioritize operational excellence, expand access to Novo Nordisk’s therapies worldwide, and ensure that manufacturing and supply chain capabilities continue to support long-term demand. His appointment underscores the company’s emphasis on continuity and global execution. Given his extensive international experience and proven ability to scale complex operations, Maziar Mike Doustdar appears well positioned to guide Novo Nordisk through its next phase of growth while maintaining leadership in addressing some of the world’s most pressing metabolic health challenges.

The Numbers

The first number we will look into is the return on invested capital, also known as ROIC. We want to see a 10-year history, with all numbers exceeding 10% in each year. Novo Nordisk has historically earned an unusually high ROIC because its business model is very efficient. The company focuses on chronic diseases such as diabetes and obesity, where patients stay on treatment for many years. Once a patient starts a therapy, switching is limited and demand is predictable. This creates stable revenue and strong cash flows without requiring constant new investments. At the same time, Novo Nordisk’s long specialization in metabolic diseases allows it to reuse the same manufacturing, research, and commercial setup across multiple products. That combination of high margins and efficient capital use explains why ROIC has stayed well above 50% for most of the past decade. The sharp decline in ROIC in 2025 does not mean the business has become weaker. It mainly reflects how much the company is investing right now. Novo Nordisk is spending heavily on new factories, equipment, and supply chain capacity to meet global demand for GLP-1 drugs. These investments increase the capital base immediately, while the profits they are meant to generate will come over many years. When capital is added faster than earnings grow, ROIC naturally falls, even if the long-term returns remain attractive. Timing also matters. Obesity treatments are still early in their global rollout. Demand is strong, but supply is constrained, reimbursement systems are still developing, and access is being expanded gradually. Earnings are rising, but not yet fast enough to fully reflect the scale of the investments already made. This temporarily pushes ROIC down. Looking ahead, ROIC is likely to improve gradually as new manufacturing capacity is filled and volumes continue to rise. Novo Nordisk has indicated that it plans to lower prices over time to expand access, which will put pressure on margins in the near term. These price reductions tend to take effect quickly, while the volume response typically comes with a delay as reimbursement systems adjust and patient access expands. As a result, margins may be temporarily weaker even as capacity utilization improves. Over time, however, higher volumes and better utilization of existing assets should support a recovery in ROIC, even if it does not return to the extreme levels seen a decade ago. Novo Nordisk is now a much larger and more capital-intensive company, making structurally lower but still very attractive returns on capital a more realistic long-term outcome. The key point is that even after the decline, Novo Nordisk’s ROIC remains far above its cost of capital and well ahead of most pharmaceutical peers. The drop reflects a deliberate choice to invest aggressively in capacity and access while accepting near-term pressure from price reductions, rather than a deterioration in the underlying business quality. Over time, as volumes scale and new capacity is absorbed, ROIC should stabilize at a high level and remain one of the company’s defining strengths, even if it settles below the exceptional levels of the past.

The next numbers are the book value + dividend. In my old format this was known as the equity growth rate. It was the most important of the four growth rates I used to use in my analyses, which is why I will continue to use it moving forward. As you are used to see the numbers in percentage, I have decided to share both the numbers and the percentage growth year over year. To put it simply, equity is the part of the company that belongs to its shareholders – like the portion of a house you truly own after paying off part of the mortgage. Growing equity over time means the company is becoming more valuable for its owners. So, when we track book value plus dividends, we’re essentially looking at how much value is being built for shareholders year after year. Novo Nordisk has managed to grow equity every year for nearly a decade because its business consistently generates far more profit than it needs to reinvest to sustain and grow operations. The company operates in chronic diseases with recurring demand, high margins, and strong pricing power, which leads to steady earnings even through economic cycles. When a company combines predictable revenue with high profitability and disciplined capital allocation, equity tends to compound naturally over time. Another important factor is how Novo Nordisk has used its capital. While the company has made sizeable acquisitions, including investments in manufacturing capacity and external therapies, these moves have largely been funded through strong internal cash generation rather than balance sheet stress. Acquisitions and capacity expansions have been closely aligned with the company’s core therapeutic focus and integrated into existing platforms, rather than representing unrelated or speculative expansion. This disciplined approach has allowed Novo Nordisk to continue compounding equity over time, even while investing heavily for future growth. The acceleration in equity growth since 2021 reflects the success of GLP-1 therapies and the operating leverage embedded in the business. As revenues scaled rapidly, profits grew even faster, while the equity base expanded in a controlled and disciplined way. This combination has led to particularly strong equity growth in recent years. Looking ahead, the trend of growing equity is likely to continue, although the pace may moderate. Novo Nordisk is entering a period of heavier capital investment, price adjustments to expand access, and increased competition, all of which can affect short-term profitability. However, as long as the company continues to earn returns on capital well above its cost of capital and reinvests a meaningful portion of profits back into the business, equity should keep growing over time.

Finally, we will analyze the free cash flow. Free cash flow, in short, refers to the cash that a company generates after covering its operating expenses and capital expenditures. I use levered free cash flow margin because I believe that margins offer a better understanding of the numbers. Free cash flow yield refers to the amount of free cash flow per share that a company is expected to generate in relation to its market value per share. Novo Nordisk has historically generated very strong free cash flow because its business produces high profits and reliably turns those profits into cash. The company focuses on chronic diseases such as diabetes and obesity, where demand is recurring and predictable. Combined with high margins and scale, this has allowed Novo Nordisk to consistently generate large amounts of cash year after year. The decline in free cash flow and free cash flow margins over the past two years is mainly the result of unusually high investment spending. Novo Nordisk is in the middle of the largest expansion program in its history, building and acquiring manufacturing capacity to support long-term demand for GLP-1 therapies. Cash has been spent upfront on factories, equipment, and facilities, while the additional revenue and profits from these investments will come gradually over time. This naturally lowers free cash flow in the short term. Importantly, this does not reflect weaker cash generation from the underlying business. In 2025, Novo Nordisk generated close to DKK 120 billion in cash from operations on around DKK 100 billion in net profit, showing that the core business continues to convert earnings into cash very efficiently. Free cash flow was lower mainly because around DKK 60 billion was reinvested into manufacturing capacity and infrastructure. Margins have also come under pressure for reasons that are largely expected. Lower prices to expand access, higher spending on launches and promotion, increased depreciation from newly acquired manufacturing sites, and the growing share of oral GLP-1 products have all weighed on margins. As with pricing, these margin effects tend to show up quickly, while the volume benefits take time to build. Looking ahead, free cash flow is expected to improve as investment spending peaks and then declines. Management has stated that the company is now moving past the most intense phase of its expansion, with capital spending expected to fall more meaningfully as major projects are completed. As new facilities are fully brought online and used more efficiently, cash generation should remain strong while investment needs ease. Novo Nordisk uses its free cash flow in a disciplined and deliberate way. In recent years, a large share has been reinvested into expanding manufacturing capacity and selectively acquiring external assets to strengthen the pipeline. At the same time, the company continues to return cash to shareholders through dividends and share buybacks in a consistent and predictable manner, while preserving the financial strength needed to support long-term growth. The free cash flow yield is at its highest level in many years despite lower free cash flow caused by elevated capital expenditures. This suggests that the shares are trading at an attractive valuation, although valuation will be discussed in more detail later in the analysis.

Debt

Another important aspect to consider is the level of debt. It is crucial to determine whether a business has manageable debt that can be repaid within a period of three years. We do this by dividing total long-term debt by earnings. When analyzing Novo Nordisk’s financials, it is evident that the company has 1,09 years of earnings in debt, a figure well below the three-year threshold. Hence, debt is not a concern for investors considering Novo Nordisk. In fact, the company had not had a debt-to-earnings ratio above one year for over two decades until 2025 and has remained below three years of earnings since 1979. This reflects a business model that consistently generates strong and predictable cash flows, allowing Novo Nordisk to pay for growth, acquisitions, and manufacturing expansion using its own cash rather than taking on significant debt. Given this long history of financial discipline and careful balance sheet management, I do not expect debt to become an issue for Novo Nordisk in the future.

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Risks

Patent expirations is a risk for Novo Nordisk because once exclusivity ends, lower priced copy versions can enter the market and quickly push down prices, volumes, and profitability, especially in countries where payers actively switch patients to cheaper alternatives. Patent protection allows Novo Nordisk to sell its medicines without direct price competition, enabling premium pricing and strong margins. Once a core patent expires, competitors are allowed to launch similar versions at significantly lower prices. In many healthcare systems, payers actively encourage or mandate switching to these cheaper alternatives, meaning the impact is often swift. Even if doctors and patients trust the original product, reimbursement rules and tender systems can drive rapid market share loss. This dynamic has already been visible with Victoza, Novo Nordisk’s first-generation GLP-1 diabetes therapy. After patent protection expired, generic versions entered the market and quickly reduced Victoza’s contribution to revenue. While this was a known and expected outcome, it illustrates how fast sales can decline once exclusivity ends, even for well-established products. The risk is more pronounced today because Novo Nordisk’s growth has become increasingly concentrated around a small number of blockbuster GLP-1 therapies. Ozempic, Wegovy, and Rybelsus are central to the company’s current earnings power. When a large share of profits comes from a limited number of molecules, any loss of exclusivity has a disproportionately large financial impact, making patent cliffs more meaningful than when revenue is spread across many mature products. While key semaglutide patents remain protected in the United States and Europe into the early 2030s, Novo Nordisk faces an earlier loss of exclusivity in several international markets starting in 2026. Markets such as China, India, and Canada are particularly important because they are large, fast-growing, and more price sensitive. In these regions, competition tends to focus heavily on price, and switching to cheaper alternatives can happen faster than in more brand-driven markets. Supplementary patents covering manufacturing processes, formulations, or specific uses provide some additional protection, but they do not fully eliminate the risk. Once the core compound patent expires, competitors may still find ways to launch similar products using alternative production methods or regulatory pathways. As a result, secondary patents tend to slow competition rather than prevent it entirely. For this reason, patent expirations remain a real and ongoing risk for Novo Nordisk. The company’s ability to manage this risk depends on continued innovation, strong lifecycle management, and the successful rollout of next-generation therapies and new formats.

Competition is a risk for Novo Nordisk because the obesity market has evolved into one of the most competitive, fast-moving, and consumer-influenced segments in global pharmaceuticals, reducing predictability around pricing, volumes, and market share. For many years, Novo Nordisk benefited from clear leadership in obesity treatment. That landscape has changed rapidly. Today, virtually every major pharmaceutical company views obesity as a strategically critical market, validating the category Novo Nordisk pioneered but also intensifying competition. Unlike more stable prescription markets such as insulin or cardiovascular drugs, obesity treatment is still forming, expanding quickly, and reacting strongly to new launches, perceptions, and channels. This makes competitive outcomes far less predictable. The most immediate competitive pressure comes from Eli Lilly. The rivalry has shifted from a question of who could supply enough product to a direct contest over therapeutic superiority. Lilly’s tirzepatide based drugs, Mounjaro and Zepbound, have demonstrated higher average weight loss than semaglutide in clinical settings. In a market where magnitude of weight loss is a primary decision factor for patients, prescribers, and payers, even moderate differences in efficacy can translate into large differences in prescription share. This has already been visible in the United States, where Lilly has captured a majority of new prescriptions, creating a volume tailwind for Lilly and a relative headwind for Novo Nordisk. This dynamic matters because obesity treatment behaves more like a consumer market than traditional medicine. Patient choice is influenced not only by doctors and reimbursement rules, but also by social media, online communities, and global information flows. Perceptions formed in the United States quickly spill over into Europe, Latin America, and other regions, shaping demand before local launches even occur. As a result, competitive positioning in one key market can affect global performance, amplifying the impact of short-term disadvantages. An additional competitive pressure comes from unregulated compounded versions of GLP-1 drugs. These products do not go through the same approval processes for safety, quality, and efficacy, yet they serve a large self-pay population, especially in the United States. Their availability lowers the effective price floor in parts of the market and weakens brand control. Even if these products are temporary or face tighter regulation over time, they contribute to near-term volume leakage and pricing pressure.

Pricing pressure is a risk for Novo Nordisk because the company is operating in a market where lower prices are no longer cyclical or temporary, but increasingly structural, especially in the United States, which remains its most important profit pool. In diabetes, price pressure is already well established. Novo Nordisk has for years guided to underlying price declines for GLP-1 therapies such as Ozempic in the range of 10 to 15% annually. This reflects a mature market with strong payer power, widespread use of rebates, and intense negotiation by insurers and pharmacy benefit managers. While volumes can still grow, price erosion has become a persistent headwind that limits revenue growth even when demand remains strong. In obesity, pricing pressure is emerging earlier in the product lifecycle than is typical for pharmaceuticals. Wegovy launched as a premium-priced therapy, but Novo Nordisk has already begun cutting prices materially to expand access. Several factors are driving this. A higher share of prescriptions is moving into insured channels, where payers demand discounts. At the same time, Novo Nordisk is actively building a cash-pay channel at lower price points to compete with compounded products and broaden the addressable market. On top of this, policies such as Most Favored Nation pricing affect both commercial and government programs, pulling realized prices lower across channels. The key risk lies in timing. Price reductions take effect immediately, while the expected volume response arrives with a lag. Expanding access requires time for reimbursement decisions, physician behavior, and patient uptake to adjust. Even if management is confident that lower prices will eventually lead to significantly higher volumes, there is an interim period where revenue growth and margins can come under pressure. If volumes do not scale as quickly as expected, net revenue can stagnate or decline despite strong underlying demand. Regulatory and political dynamics add another layer of uncertainty. Recent negotiations that sharply reduced out-of-pocket prices for certain patient groups effectively reset expectations for what GLP-1 treatments should cost. Once a lower price point is established in a large program, commercial payers often seek similar terms, increasing the risk that price erosion spreads more broadly and becomes difficult to reverse. Novo Nordisk views these price reductions as an investment rather than a sign of weakness. The strategy is to trade near-term pricing and margin pressure for faster volume growth, broader access, and long-term leadership in a very large market. That logic is sound, but it does not eliminate the risk. The central question is whether volume growth can consistently outpace price declines. If prices fall faster than volumes rise, even temporarily, revenue growth and profitability can suffer.

Reasons to invest

Portfolio strength is a reason to invest in Novo Nordisk because the company is building a broad, flexible, and deeply differentiated set of treatments that can serve many different patient needs, price points, and use cases across obesity, diabetes, and related chronic diseases. A key advantage of Novo Nordisk’s portfolio is that it is designed around patient segmentation rather than a single blockbuster product. Just as the company has historically offered multiple insulin formulations to meet different clinical and affordability needs, it is now applying the same logic to obesity and cardiometabolic care. Some patients prioritize maximum weight loss, others prefer oral treatments over injections, and others need therapies that fit specific medical profiles or lifestyles. Novo Nordisk’s portfolio is increasingly structured to address this full spectrum rather than relying on one product to serve everyone. The launch of the Wegovy pill is a central example of this strength. As the world’s first and only once-daily oral GLP-1 approved for weight management, it adds a completely new option to the obesity market while building on the proven efficacy and safety of semaglutide. This is not simply a convenience upgrade. The oral format opens access to patients who are unwilling or unable to use injections, expands the self-pay and telehealth channels, and lowers barriers to adoption in markets where injections carry social or practical resistance. Beyond current products, the pipeline adds further depth. Novo Nordisk is advancing higher-dose semaglutide, including the 7.2 mg version of Wegovy, which has shown weight loss results close to competing injectable therapies while retaining proven cardiovascular benefits. This allows the company to compete on efficacy without abandoning its existing platform. At the same time, next-generation therapies such as CagriSema are designed to push outcomes further and provide optionality if competitive dynamics shift. The portfolio strength extends beyond obesity. In diabetes, Novo Nordisk continues to expand choice with once-weekly basal insulin Awiqli and combination therapies such as Kyinsu, addressing adherence challenges and simplifying treatment regimens. These innovations build on long-standing relationships with healthcare systems and reinforce the company’s leadership in chronic disease management. In rare diseases, upcoming launches such as denecimig for hemophilia A add diversification and demonstrate that Novo Nordisk’s innovation engine extends beyond GLP-1s. Taken together, Novo Nordisk’s portfolio is not just large, but thoughtfully constructed. It combines proven blockbusters, differentiated delivery formats, next-generation innovation, and strategic optionality across multiple diseases.

The pipeline is a reason to invest in Novo Nordisk because it reflects a long-term strategy built around treating obesity as both a large, scalable condition and a complex, multi-disease platform with applications far beyond weight loss alone. At the core of the pipeline is continued development of traditional obesity therapies aimed at large patient populations. These treatments focus on meaningful and sustained weight loss, tolerability, convenience, and affordability. For millions of patients, obesity treatment is primarily about reducing weight to improve mobility, quality of life, and long-term health risks. Novo Nordisk’s pipeline supports this segment with therapies designed for broad access, multiple dosing options, and both injectable and oral formats. This ensures the company remains competitive in the high-volume part of the market where scale, supply reliability, and patient preference matter most. At the same time, Novo Nordisk’s pipeline recognizes that obesity is not a single disease but a gateway to multiple serious medical conditions. A significant proportion of people living with obesity also suffer from related diseases such as metabolic dysfunction-associated steatohepatitis, cardiovascular disease, kidney disease, and type 2 diabetes. For these patients, weight loss alone is not enough. The clinical goal shifts toward improving organ health, reducing disease progression, and avoiding costly interventions such as hospitalizations or organ transplants. Novo Nordisk is developing pipeline assets specifically for these adjacent conditions, where treatment value is defined by long-term outcomes rather than kilograms lost. This dual-track approach is important. Traditional obesity drugs can become widely used, lower-priced standards of care over time, while more advanced therapies target smaller but higher-risk patient groups with more complex needs. By serving both segments, Novo Nordisk reduces reliance on any single product cycle and creates a natural progression where patients can move through different treatments as their condition evolves. Another strength of the pipeline is its focus on flexibility and patient choice. Novo Nordisk is advancing therapies in both injectable and oral forms, acknowledging that different patients have different preferences around discretion, convenience, and dosing frequency. This matters in obesity care, which is more consumer-driven than most therapeutic areas. A pipeline that offers multiple formats increases adoption, improves adherence, and reduces the risk of patients switching to competitors simply because of delivery method. Importantly, the pipeline builds on decades of expertise in peptide and protein biology to address multiple metabolic pathways at once. Many pipeline programs are designed to improve not just body weight, but also blood glucose control, cardiovascular risk, liver health, and kidney outcomes. This broader cardiometabolic focus strengthens the value proposition for regulators and payers, especially as obesity treatments move into wider reimbursement frameworks.

New and wider access to consumers is a reason to invest in Novo Nordisk because it fundamentally expands the size, durability, and reach of the obesity and diabetes markets, while reshaping how and where demand is captured. A key shift has been Novo Nordisk’s recognition that obesity is not served well by traditional, physician-centric healthcare models alone. People living with obesity often face stigma, embarrassment, and long wait times, which creates friction in accessing care. Unlike diabetes, where treatment is embedded in routine clinical pathways, obesity treatment is far more consumer-driven. Many patients actively seek privacy, speed, and discretion. By adapting to these realities, Novo Nordisk is unlocking demand that previously existed but was inaccessible. This has led to a deliberate expansion into direct-to-consumer and self-pay channels. Through platforms such as NovoCare, partnerships with telehealth providers, and agreements with large retail pharmacy chains, Novo Nordisk has created multiple access points that allow patients to obtain treatment without navigating complex insurance or specialist referral processes. This matters because it removes one of the biggest bottlenecks in obesity care: access, not willingness to be treated. Affordability initiatives reinforce this access expansion. By introducing lower self-pay prices and structured introductory offers, Novo Nordisk has significantly reduced the upfront barrier for patients who are uninsured or underinsured. This has had a measurable effect. Self-pay prescriptions now account for a meaningful share of Wegovy volumes, and early data suggests that many of these patients are new to treatment rather than switching from existing therapies. In other words, lower prices and easier access are expanding the market rather than cannibalizing it. Direct-to-consumer access also allows Novo Nordisk to compete more effectively against unregulated compounded products. During periods of limited access and high prices, compounded alternatives flourished despite safety and quality concerns. By offering FDA-approved medicines at more accessible price points through trusted channels, Novo Nordisk can reclaim patients who previously turned to these alternatives while strengthening brand trust and continuity of care. The United States is central to this strategy. It is the largest obesity market globally, but historically one of the most restrictive in terms of reimbursement. Recent agreements and policy changes are set to gradually expand coverage through Medicare Part D and Medicaid, while pilot programmes introduce obesity treatment into reimbursed settings for qualifying patients. Although uptake will be gradual due to administrative and educational lags, this represents a structural expansion of the addressable market rather than a temporary boost. Importantly, access expansion is not limited to the US. Novo Nordisk has accelerated international launches of Wegovy and other GLP-1 therapies, dramatically increasing the number of countries where treatment is available. Penetration outside the US remains low, and many markets are at an early stage of adoption. By combining new country launches with online channels and partnerships, Novo Nordisk is positioning itself to capture long-term volume growth globally.

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Valuation

Now it is time to calculate the share price. I perform three different calculations that I learned at a Phil Town seminar. If you want to make the calculations yourself for this or other stocks, you can do so through the tools page on my website, where you have access to all three calculators for free.

The first is called the Margin of Safety price, which is calculated based on earnings per share (EPS), estimated future EPS growth, and estimated future price-to-earnings ratio (P/E). The minimum acceptable rate of return is 15%. I chose to use an EPS of DKK 23,03, which is from the year 2025. I have selected a projected future EPS growth rate of 7%. Finbox expects EPS to grow by 6,6% in the next five years. Additionally, I have selected a projected future P/E ratio of 14, which is double the growth rate. This decision is based on Novo Nordisk's historically higher price-to-earnings (P/E) ratio. Finally, our minimum acceptable rate of return has already been established at 15%. After performing the calculations, we determined the sticker price (also known as fair value or intrinsic value) to be DKK 156,78. We want to have a margin of safety of 50%, so we will divide it by 2. This means that we want to buy Novo Nordisk at a price of DKK 78,39 (or lower obviously) if we use the Margin of Safety price.

The second calculation is known as the Ten Cap price. The rate of return that a company owner (or stockholder) receives on the purchase price of the company essentially represents its return on investment. The minimum annual return should be at least 10%, which I calculate as follows: The operating cash flow last year was 119.100, and capital expenditures were 60.000. I attempted to analyze their annual report to calculate the percentage of capital expenditures allocated to maintenance. I couldn't find it, but as a rule of thumb, you can expect that 70% of the capital expenditures will be allocated to maintenance purposes. This means that we will use 42.000 in our calculations. The tax provision was 28.106. We have 4.443 outstanding shares. Hence, the calculation will be as follows: (119.000 – 42.000 + 28.106) / 4.443 x 10 = DKK 236,57 in Ten Cap price.

The final calculation is referred to as the Payback Time price. It is a calculation based on the free cash flow per share. With Nordisk's free cash flow per share at DKK 13,27 and a growth rate of 7%, if you want to recoup your investment in 8 years, the Payback Time price is DKK 145,68.

Conclusion

I believe that Novo Nordisk is a great company with strong management and a business model built to endure over decades. The company has established a durable moat through a combination of scale, manufacturing depth, broad product offerings and delivery formats, deep expertise in metabolic diseases, strong market access capabilities, and a long-term ownership structure that supports disciplined decision-making. Novo Nordisk has historically generated a very high ROIC, and while ROIC declined in 2025, this reflects heavy investments in new factories, equipment, and supply chain capacity to meet global demand for GLP-1 therapies rather than a deterioration in the underlying business. As these investments are absorbed and utilization improves, ROIC is expected to rise again while remaining structurally high. Free cash flow also declined in 2025, largely due to capital expenditures that are currently at peak levels, which supports the expectation that free cash flow will recover as spending normalizes. Patent expirations remain a risk because once exclusivity ends, lower-priced generic or biosimilar products can quickly pressure prices, volumes, and profitability as payers encourage switching. Competition is another risk, as the obesity market has become fast-moving, consumer-driven, and increasingly crowded, making pricing and market share less predictable than in traditional pharmaceutical segments, with intensified rivalry from Eli Lilly and pressure from compounded alternatives in the self-pay channel. Pricing pressure is also a structural risk, as price declines in both diabetes and obesity are driven by payer power, policy changes, and deliberate price reductions to expand access, creating a timing mismatch where prices fall immediately while volume growth takes time to materialize. At the same time, Novo Nordisk’s portfolio strength is a clear reason to invest, as the company offers a broad and flexible range of treatments across obesity, diabetes, and other chronic diseases, combining established products with oral and injectable options, higher-dose and next-generation therapies, and diversification into areas such as rare diseases. The pipeline further strengthens the investment case by positioning obesity as both a large, scalable market and a broader cardiometabolic platform, with therapies addressing weight loss alongside related conditions such as fatty liver disease, and cardiovascular disease, supporting long-term growth while reducing reliance on any single product cycle. Finally, expanded and more consumer-oriented access is a key driver of future growth, as Novo Nordisk moves beyond traditional physician-centric models into direct-to-consumer, telehealth, retail, and broader reimbursement channels, unlocking new patient demand and making revenue more durable across markets and cycles. It should be noted that the calculations in this analysis are based on a year with unusually high capital expenditures that negatively affect both the Ten Cap and Payback Time prices, while the growth outlook is also conservative given management’s guidance for negative growth in 2026. For that reason, I view the assumed 50% discount in all three valuation methods as effectively more than 50%, and I believe that buying shares below DKK 400, which still implies a meaningful discount to intrinsic value based on the Ten Cap framework, represents an attractive entry point for long-term investors.

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