NVO Stock Down as Medicare Selects Semaglutide Drugs for Price Cuts

Core Viewpoint - Novo Nordisk's shares declined by 5.3% following Medicare's announcement of including its semaglutide medicines in the second round of price negotiations for 2025, raising concerns about potential profit margin reductions [1][2]. Group 1: Medicare Negotiations Impact - Medicare has selected Novo Nordisk's semaglutide medicines for price negotiations, which will take effect in 2027, with a decision deadline for the company set for February 28, 2025 [2]. - The Inflation Reduction Act enables Medicare to negotiate prices for certain prescription drugs, aiming to make them more affordable for seniors and individuals with disabilities [2]. - Approximately 5.3 million Medicare Part D beneficiaries used the selected drugs, which accounted for around $41 billion, or 14%, of total gross covered prescription drug costs under Medicare Part D from November 2023 to October 2024 [3]. Group 2: Stock Performance and Industry Comparison - In the past three months, Novo Nordisk's shares have decreased by 32.9%, while the industry average decline was 16.6% [3]. - Eli Lilly, a competitor in the obesity market, also saw a 4.2% decline in its stock, despite none of its drugs being selected for negotiations, indicating investor concerns about future selections [4]. Group 3: Clinical Study Results - Novo Nordisk announced positive topline data from a late-stage study of semaglutide 7.2 mg, showing superior weight loss compared to Wegovy and placebo [7][8]. - Patients starting with a mean baseline weight of 113 kg experienced a weight loss of 20.7% after 72 weeks with semaglutide 7.2 mg, compared to 17.5% with Wegovy and 2.4% with placebo [9]. - The candidate demonstrated a safe profile, with adverse events mostly mild to moderate, consistent with the GLP-1 receptor agonist class [10]. Group 4: Future Expectations - Novo Nordisk plans to present detailed results from the phase IIIb STEP UP study at a medical conference in 2025 and expects to share results from another phase III study for T2D and obesity in the coming months [11].