When a company sheds over $100 billion of market value in one day, you sit up and pay attention, especially when that company is one of the largest companies in Europe.
Novo Nordisk (NYSE: NVO), the Danish pharmaceutical giant that launched the semaglutide sold under brand names Ozempic (mainly for treatment of diabetes) and Wegovy (mainly for weight loss management), lost over €60 billion (A$100 billion) in market value on Tuesday after cutting its full-year guidance. It now expects 2025 sales growth of just 8–14%, down from 13–21%. Its shares plunged 22%, and are now down 58% over the last year.
The reason? Not demand. Not efficacy. But competition from legitimate rivals like Eli Lilly and a wave of US copycat compounders making knockoff versions of Ozempic and Wegovy.
At first glance, this has nothing to do with ResMed Inc (ASX: RMD), the sleep apnoea giant whose shares were battered in 2023 as investors feared weight-loss drugs would shrink demand for CPAP machines.
But in markets, perception sometimes matters as much as fundamentals (at least in the short term). And Novo Nordisk's unravelling could subtly reshape (for the better) how investors view ResMed.
Image source: Getty Images
What is going on?
The real story here is that Novo is losing control of its market, particularly in the US. Eli Lilly's Zepbound has surged past Wegovy in new prescriptions. And despite an FDA ban on compounded GLP-1 drugs, many Americans are still using them.
Novo Nordisk is now in litigation mode, trying to protect its turf. That's not the playbook of a company with an unassailable moat.
What this means for ResMed
Fundamentally, nothing has changed. GLP-1 drugs still work. They still help patients lose weight. And obesity remains a key driver of sleep apnoea.
But the narrative has changed. Investors are perhaps starting to realise that weight loss drugs are not necessarily a silver bullet, nor are they the only treatment option for sleep apnoea and that Resmed is one of many solutions to the sleep apnoea problem.
Meanwhile, ResMed has kept delivering. Revenue is growing, margins are holding up, and the company is expanding into software and digital health. Crucially, it's not pretending to be a one-size-fits-all solution. It's part of a broader, long-term healthcare puzzle.
At the time of writing, ResMed shares are up 1.42% for the day and up 33% over the last year, suggesting sentiment may finally be turning.
Foolish Takeaway
Novo Nordisk's crash wasn't about science. It was about market control and copycats. That's bad news for Novo, but potentially good news for ResMed. Not because the threat is gone, but because the narrative has come back down to earth.
