What can a wonder drug maker and a phone maker have in common? Their fall from grace

The meteoric rise of Denmark’s Novo Nordisk A/S from century-old insulin producer to Europe’s most valuable company has been a feel-good story of innovation in a region where those are rare. Its diabetes and obesity drugs Ozempic and Wegovy, have become a global phenomenon: They opened up a market potentially worth $100 billion and transformed the Danish economy (and Hollywood too). It’s reminiscent of Finland’s boom in the heyday of cellphone pioneer Nokia Oyj — until Apple Inc.’s iPhone spoiled the party.

A Nokia-esque turn for the worse is now potentially unfolding, however. Novo’s shares plummeted by 21% on Friday to their lowest level since August 2023, after the study results of next-generation experimental obesity shot CagriSema fell short of the 25% weight loss that had been predicted. The actual result of 20.4% to 22.7% weight loss over 68 weeks is obviously neither failure nor disruption, as my colleague Lisa Jarvis notes, and is in line with the performance of rival Eli Lilly & Co.’s existing Zepbound shot. But it does speak to the eroding competitive advantage of a European first mover in the face of a ferocious US rival: Lilly’s shares rose and it’s now viewed as the preeminent market player that could become the first trillion-dollar drug company.

There were signs that Novo might find itself in a less comfortable spot than that suggested by its premium valuation. Despite effectively arriving late to the party, Lilly’s Zepbound has built a roughly 40% market share in the US — the weight-loss El Dorado — in less than a year. And even if supply constraints are the bigger story in a market where there’s plenty of demand to go around, developments like the results of a head-to-head trial of Zepbound and Novo’s Wegovy — which Lilly said gave a slight advantage to Zepbound — added to the sense of a marketing balance slowly tipping away from the Danish company. The above chart shows how Novo’s market value has been lagging Lilly’s for the past year.


There’s likely to be more trans-Atlantic pressure ahead. Lilly is looking at whether an experimental compound called retatrutide can change the game after it delivered 24% weight loss in a smaller study last year. Other drugmakers, like Amgen Inc. and Pfizer Inc., are eyeing their own tilt at the market, and the patent expiration of Wegovy in the early 2030s is also on the horizon. Bloomberg Intelligence’s John Murphy notes some of these developments will likely challenge consensus expectations of Wegovy driving almost 20% of Novo’s sales in 2030.

From a pharma perspective, this is all good news for the consumer; yet it’s a pretty humbling development for Europe and its mega-cap “GRANOLAS” — an acronym devised by Goldman Sachs Group Inc. capturing top companies with a competitive advantage, including chip-equipment supplier ASML Holding NV, LVMH Moët Hennessy Louis Vuitton SE and Novo. The economic spillover of Novo’s boom has been big: a hiring binge employing 32,000 people in Denmark, the opening of new manufacturing sites and investments in countries like France and an export boost moving the needle of European gross domestic product. Some of that is at risk, with Novo’s selloff on Friday seen weighing on the Danish currency. Still, as Nordea’s Helge Pedersen notes, the Danish economy is still well-diversified — it would be wrong to imagine the kind of downturn that Finland went through as Nokia shriveled.

Europe’s corporate giants are facing plenty of challenges going into 2025, from a luxury slowdown and Trump tariffs to a domestic market that’s so sluggish it’s in danger of “disappearing,” as hedge fund boss Ken Griffin recently put it. While Novo is still a success story — and remains Europe’s most valuable firm — the home-market advantage of the US and the competitive pressure of its firms is a pattern that investors have to keep in mind all over again. Europe has to hope there’s a different ending this time.