Why the Wegovy Price Cut Actually Signals Opportunity for Novo Nordisk

The Headline That Shocked Everyone

When Medicare announced its negotiated drug prices recently, Novo Nordisk stock initially seemed doomed. The CMS selected three semaglutide-based therapies—Wegovy, Ozempic, and Rybelsus—for their price negotiation program, slashing list prices from $959 per 30-day supply to just $274. That’s a brutal 71% markdown.

Logically, investors should have panicked. But here’s where it gets interesting: the stock climbed about 4% on the news.

Why the Market Saw This Coming

Before you assume this is irrational exuberance, consider what savvy investors already knew. When Novo Nordisk reported third-quarter earnings, management already disclosed they’d agreed to the negotiated price—they just hadn’t revealed the number yet. The company had also modeled the impact, estimating that even with this CMS price reduction applied retroactively to January 2025, revenue growth would only suffer a low single-digit hit—roughly 4% maximum.

Translation: Everyone was bracing for worse. The fact that the actual cut landed in that predicted range meant no surprise downside. In fact, some traders had feared steeper reductions, making this announcement a relief.

The Timeline That Changes Everything

Here’s the critical detail most headlines missed: these price cuts don’t take effect until January 1, 2027. That two-year runway matters enormously.

By then, Novo Nordisk’s semaglutide pipeline will look dramatically different. The company recently received FDA approval for a new indication: treating metabolic dysfunction-associated steatohepatitis (MASH), a serious liver disease affecting millions of patients. This became the first GLP-1 therapy approved for this indication, and it represents a significant unmet medical need.

Analysts estimate MASH revenue could exceed $1 billion annually. Additionally, an oral formulation for weight loss sits in development, which could expand the addressable market even further. Recent approvals have also extended semaglutide’s reach into cardiovascular risk reduction for diabetes patients.

By 2027, these new revenue streams could mean the 4% headwind becomes largely irrelevant to overall growth metrics.

The Counter-Intuitive Benefit: Volume

Lower prices historically drive higher demand. While pharmaceutical companies typically fret about margin compression, increased patient access could mean substantially higher sales volumes. More patients taking semaglutide at lower prices might offset some of the per-unit revenue loss—a dynamic the market seems to have already priced in.

What’s Next for Novo Nordisk

The company has other catalysts brewing. CagriSema, another GLP-1 medication in their pipeline, demonstrated superior weight-loss efficacy compared to semaglutide in phase 3 trials. The company is also advancing amycretin, a dual-hormone therapy mimicking both GLP-1 and amylin action, with promising phase 2 data in type 2 diabetes management.

Translation: Novo Nordisk isn’t placing all its bets on semaglutide anymore.

The Valuation Angle

Despite the recent stock struggles and two years of operational challenges—including disappointing earnings, clinical setbacks, and competitive pressure eroding market share—Novo Nordisk now trades at just 12.5 times forward earnings. The broader healthcare sector averages 18.8x.

That valuation discount, combined with multiple growth catalysts and a price-cut timeline that allows runway for pipeline expansion, suggests the market may have overdiscounted this company’s prospects.

The Bottom Line

The Medicare price negotiation on semaglutide looked catastrophic on its surface. But the 4% market reaction wasn’t a death knell—it was rational recognition that Novo Nordisk has positioned itself to absorb this headwind through volume gains, new indications, and a robust pipeline waiting in the wings. While challenges remain, the risk-reward setup at current valuations may favor investors with a multi-year horizon.