Morgan Stanley downgrades Novo Nordisk over semaglutide patent cliff
Semaglutide, the ingredient in Ozempic and Wegovy, faces US and European exclusivity loss in the early-to-mid 2030s, a business risk analysts say could eventually affect patient costs.
Morgan Stanley downgraded Novo Nordisk to Underweight from Equal-weight on September 11, 2026, pointing to a subdued mid-term growth outlook and the coming loss of exclusivity for semaglutide, the active ingredient in Ozempic, Wegovy and Rybelsus [1]. Novo Nordisk shares fell 2.6% in early Copenhagen trading after the call [1].
The analysts, led by Thibault Boutherin, wrote that Novo's valuation does "not entirely" reflect subdued mid-term growth and "the implications of the semaglutide patent cliff on Novo's terminal value" [1]. Morgan Stanley kept its price target at 250 Danish crowns, which it said implies more than 10% downside from the last closing price [1].
Semaglutide accounted for 75% of Novo Nordisk's sales in 2026, the analysts said, and will face a large patent cliff in the early-to-mid 2030s across both Europe and the United States [1]. Morgan Stanley models semaglutide still representing 59% of company sales in 2031, the year it expects the loss-of-exclusivity impact to begin [1].
The bank forecasts 2% to 3% revenue and operating profit growth for Novo in 2027, roughly in line with consensus, and a 4% compound annual growth rate for both revenue and operating profit from 2027 through 2030 [1]. That compares with the 4% revenue and 7% operating profit growth Morgan Stanley expects from the broader European pharmaceutical sector [1]. Novo trades at 12.5 times estimated 2027 earnings, a 7% discount to European large pharma peers but a 35% premium to global peers facing their own loss-of-exclusivity issues, such as Sanofi and GSK, the analysts wrote [1].
Morgan Stanley forecasts Novo's oral obesity franchise will reach $10 billion in sales by 2031, but said that "will not be enough to offset pricing and competitive headwinds" [1]. A survey of 200 primary care physicians by the bank found growing adoption of GLP-1 drugs in diabetes and obesity, alongside market share losses for Novo over the next 18 months to Eli Lilly's current products and to Lilly's retatrutide, expected in 2027 [1]. Revenue forecasts for Novo's other pipeline programs have not been reported.
Novo has also reported results from a phase 3 trial of semaglutide in children aged six to 11, more than 85% of whom had Class II or Class III obesity [2]. In that trial, 40.4% of patients on semaglutide were no longer classified as obese 68 weeks after starting treatment, compared with 0% on placebo, with safety and tolerability consistent with what is already known about GLP-1 drugs, according to the report [2]. Wegovy is currently approved for chronic weight management in adults and children aged 12 and older [2]. A higher-dose Wegovy formulation was approved earlier this year, and an oral Wegovy was launched in January [2].
Why it matters for patients
Semaglutide is the molecule in three products patients may already use: Ozempic and Rybelsus for type 2 diabetes and Wegovy for weight management [1][2]. When exclusivity ends, other manufacturers can typically sell competing versions, which over time tends to pressure prices. Whether that happens in the US, on what timetable, and how much it would change what patients pay has not been disclosed; loss of exclusivity in the US often depends on patent litigation and regulatory review that has not been settled here [1]. Morgan Stanley's own model still has semaglutide at 59% of Novo's sales in 2031, the year it expects the exclusivity impact to begin [1].
Competition is also shaping what is available sooner. The survey of primary care physicians pointed to growing GLP-1 use overall, with Novo losing share to Eli Lilly's existing products and to retatrutide, expected in 2027 [1]. Novo's pediatric trial, if it leads to approval, would extend semaglutide's weight-management label to children aged six to 11, a group Lilly's Zepbound is not approved for [2]. The analysts also flagged that generic and competitive pressure could prove weaker than modeled, and that greater-than-expected use of oral obesity treatments is their main upside scenario [1].
What happens next
Novo Nordisk holds a capital markets day on September 21, 2026, where management is expected to restate its view of the oral obesity market and give updates on business development priorities, including MASH and chronic kidney disease; Morgan Stanley said it sees "limited scope for major announcements" there [1]. Eli Lilly's retatrutide is expected in 2027 [1]. Morgan Stanley's model places the start of the semaglutide loss-of-exclusivity impact in 2031 [1].
Sources
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