Novo Nordisk Shares Jump as Compounded Weight-Loss Drug Is Withdrawn

Novo Nordisk Shares Jump as Compounded Weight-Loss Drug Is Withdrawn

FDA pressure and legal action ease fears over pricing competition in obesity treatments

Shares in Novo Nordisk rose sharply on Monday after US telehealth firm Hims & Hers Health pulled a low-cost compounded weight-loss pill from the market, easing concerns about growing competition in the lucrative obesity drug sector.

The move followed legal pressure from Novo Nordisk and increased scrutiny from US regulators, signalling a tougher stance on unapproved versions of GLP-1 medications.

Novo Nordisk shares rebound strongly in early trading

Novo Nordisk shares climbed more than 8% in Copenhagen trading, marking a strong rebound after a difficult week for the Danish drugmaker.

The rally was driven by investor relief after Hims discontinued its newly launched $49 compounded weight-loss pill, which used semaglutide — the active ingredient in Novo’s blockbuster treatments Wegovy and Ozempic.

The withdrawal reduced fears that cheaper, unapproved alternatives could further erode Novo’s pricing power in key markets.

Why Hims pulled its compounded weight-loss pill

Hims launched the pill late last week, positioning it as a more affordable option for patients unable to access branded GLP-1 drugs. However, the product quickly drew objections from both Novo Nordisk and regulators.

Key developments included:

• Novo Nordisk raising legal concerns over the unauthorised use of semaglutide
• The U.S. Food and Drug Administration signalling tighter oversight of compounded GLP-1 drugs
• Questions around safety, quality control and regulatory compliance

By Saturday, Hims said it would discontinue the product after holding “constructive conversations with stakeholders”.

FDA signals tougher action on compounded GLP-1 drugs

Investor sentiment towards Novo improved further after FDA Commissioner Marty Makary indicated that the agency would crack down on compounded GLP-1 medications marketed as substitutes for approved therapies.

The FDA said it plans to limit the use of GLP-1 ingredients in non-approved compounded drugs, citing:

• Potential quality and safety risks
• Possible violations of federal law
• Concerns that such products undermine the regulated drug approval process

These comments helped lift Novo shares on Friday as well, ahead of Monday’s stronger rally.

Legal action reinforces Novo’s defence of its products

Novo Nordisk later confirmed it intends to pursue legal action against Hims over its attempt to market compounded versions of semaglutide-based treatments.

The decision underscores Novo’s determination to protect its intellectual property and pricing structure, particularly as demand for obesity drugs continues to surge globally.

A spokesperson for Eli Lilly, Novo’s main rival in the obesity market, said the company also welcomed the FDA’s move, highlighting industry-wide concerns over compounded alternatives.

The rebound comes after a steep decline in Novo Nordisk’s share price last week, when around $50 billion was wiped off its market value.

The sell-off followed a warning that “unprecedented” pricing pressure would weigh heavily on sales and profits in 2026. Novo shocked investors by forecasting that both revenue and earnings could fall by as much as 13%, ending a long run of double-digit growth.

Challenges facing the company include:

• Political pressure in the US to lower prescription drug prices
• Intensifying competition in the obesity treatment market
• Eli Lilly gaining ground in US prescription trends

Outlook: relief rally, but challenges remain

While Monday’s share price jump suggests relief among investors, Novo Nordisk still faces a complex outlook. The FDA’s stance and Hims’ withdrawal reduce near-term competitive threats, but pricing pressure and market competition remain key risks.

Novo shares are still down around 2% year to date, highlighting that confidence has yet to fully recover despite the latest rally.

Sources: (Investing.com, Reuters.com)