Novo Nordisk Faces Competitive Pressure in Weight Loss Market Despite New Drug Developments

Novo Nordisk's blockbuster weight loss medicine, Wegovy, has lost ground to Eli Lilly's Zepbound in the fast-growing weight loss market. The Denmark-based drugmaker recently released data from a clinical trial for its newer obesity drug, CagriSema, in which it was pitted against Zepbound. Zepbound came out on top, suggesting that even Novo Nordisk's next launch in this niche won't allow it to keep pace with its rival.

In Novo Nordisk's recent phase 3 study pitting CagriSema against Zepbound, the former led to an average weight loss of 23% compared to the latter's 25.5% over 84 weeks. CagriSema's performance, albeit below Zepbound's, was still very competitive and ahead of Wegovy.

However, Novo Nordisk quietly announced results from a phase 2 study of another candidate that investors should consider. Last year, Novo Nordisk acquired the rights to commercialize UBT251, an investigational weight loss medicine, in most countries from a China-based drugmaker. This therapy mimics the action of three different gut hormones: GLP-1, glucagon, and GIP, which play various roles in the body, including blood sugar and insulin regulation, and satiety control.

On Feb. 24, Novo Nordisk announced that, in a study conducted in China, UBT251 led to a mean weight loss of up to 19.7% in just 24 weeks. In a 72-week study, Zepbound's 20.2% mean weight loss was only slightly better than UBT251's 24-week performance. UBT251's phase 2 results suggest it could outperform Zepbound and CagriSema (and Wegovy) in a study of equal length.

There are several things to keep in mind. First, UBT251's results in China won't support approval in the U.S. Second, this was still a mid-stage study. Late-stage clinical trial results may not be nearly as strong as that. Third, Eli Lilly is working on its own triple agonist, retatrutide. In a recent phase 3 study, retatrutide achieved best-in-class weight loss of 28.7% over 68 weeks.

Meanwhile, Novo Nordisk recently launched an oral version of Wegovy. Oral Wegovy's prescription volume has been growing rapidly. An executive stated: "It looks like these are mostly new starts. That means it's expanding the market." The leading anti-obesity medicines, Novo Nordisk's Wegovy and Eli Lilly's Zepbound, are administered weekly via subcutaneous injection. Oral Wegovy isn't just cannibalizing sales of the original formulation of the medicine.

Despite the strong performance of oral Wegovy and its ability to expand the weight loss market, Novo Nordisk expects its sales to decline in 2026 amid competition and government-led drug price negotiations. The company recently hit another setback when it reported disappointing fourth-quarter results and even worse guidance for fiscal year 2026. The stock price fell by nearly 15% following these developments.

The company is awaiting approval for CagriSema, a next-generation weight loss and diabetes therapy. It could also report clinical progress for some medicines this year, including amycretin, which is being investigated in phase 3 trials as a weight loss medicine. The company has several other phase 2 or phase 3 weight loss candidates.

With UBT251 also making steady progress, and several other candidates in the pipeline, the pharmaceutical leader should at least maintain its position as the second-leading drugmaker in this large and fast-growing market. With the stock near multi-year lows and the weight-loss space projected to exceed $100 billion in sales over the next decade, Novo Nordisk could bounce back and deliver competitive returns over the next few years, provided UBT251 and other candidates pan out.