Can Novo Nordisk Keep Up with Eli Lilly?

Novo Nordisk, long dominant in the obesity drug market with its blockbuster Wegovy, is facing a challenge. Its highly anticipated next-generation drug, CagriSema, was meant to counter Eli Lilly’s surging Zepbound.

However, weak trial results, serious side effects and a lack of transparency have left investors uncertain, wiping out $125 billion in Novo's market value.

The question is can Novo recover, or is it already losing the obesity drug war to Eli Lilly?

Trial Results and Severe Side Effects

Novo Nordisk set high expectations for CagriSema, a combination of semaglutide (the active ingredient in Wegovy) and cagrilintide (an amylin mimetic). The company aimed for 25% weight loss across all patients, yet the drug only delivered 22.7% over 68 weeks—well below Zepbound’s 26%. While a few percentage points may seem minor, they are crucial.

Beyond efficacy, tolerability remains a significant concern. While Novo downplays the severity, real-world reports from trial participants paint a different picture:

• Fainting and extreme fatigue: One participant experienced repeated fainting spells within the first six months despite losing 29% of body weight.
• Severe nausea, constipation, and brain fog: Several patients reported debilitating side effects affecting daily life.
• Extreme appetite suppression: One trial participant claimed, “literally nothing was appetizing,” raising sustainability concerns.

If patients struggle to tolerate CagriSema, real-world outcomes may underperform trial data, limiting the drug’s commercial success.

Novo’s Transparency Issues

Investor confidence took another hit due to Novo’s murky handling of the trial structure. Unlike previous trials with rigid dosing protocols, CagriSema’s trial allowed flexible dosing based on patient experience. Novo failed to clearly communicate this early on, leading to confusion over why so few patients reached the highest dose.

In the meantime, speculation runs rampant—an opening Eli Lilly is exploiting to solidify its market position.

Zepbound’s Market Dominance Grows

Prescription data now confirms what investors fear: Zepbound has overtaken Wegovy in the U.S. weight-loss market. Physicians and patients appear to be shifting toward Eli Lilly’s drug, seeing it as the superior option.

Novo Nordisk must now convince healthcare providers and investors that CagriSema is still worth betting on. Without a compelling differentiation strategy, the drug risks being dismissed and overshadowed by Zepbound.

Novo’s Competitive Moat

Despite its current struggles, Novo Nordisk has built a formidable supply chain moat that has historically given it an edge over competitors.

1. In-House Manufacturing & Vertical Integration – Unlike competitors relying on contract manufacturers, Novo controls its own production, ensuring stable supply and pricing.
2. Raw Material Monopoly – Novo has secured exclusive access to key peptides and enzymes needed for GLP-1 drug production, making it difficult for rivals to scale quickly.
3. Early Expansion – Anticipating demand, Novo invested $3.7 billion in Danish production facilities in 2022, while competitors are still scrambling to build capacity.
4. Exclusive Control Over Pen Injectors – Novo owns the supply chain for its proprietary injection devices, delaying rivals like Eli Lilly, which must develop their own alternatives.
5. Strategic Supply Constraints – By limiting new prescriptions, Novo maintains an artificial sense of scarcity, driving up demand and pricing power.

While these advantages have helped Novo maintain dominance, they are not immune to regulatory scrutiny. If governments step in to cap pricing or force increased supply, Novo’s grip could weaken.

What’s Next?

Novo Nordisk has until the ADA meeting in June to regain investor confidence. To do so, it must:

• Clarify the dosing strategy and explain why so few patients reached the highest dose.
• Prove that CagriSema has a unique advantage over Zepbound beyond marginal weight-loss differences.
• Develop a compelling commercial plan that reassures physicians and patients about side effect management.

If Novo fails to deliver a convincing turnaround strategy, it risks permanent damage to its obesity drug leadership. Eli Lilly is already seizing momentum, and Novo’s failure to respond effectively could see it relegated to second place for years to come.