Novo Nordisk (NVO +0.61%) has not had a great year. The company's shares have been southbound due to clinical setbacks and worse-than-expected financial results. The Denmark-based drugmaker continues to encounter some headwinds.
Recent comments from President Trump sent the stock down by almost 6% in a single day. Let's discuss what investors should do about these recent developments.
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Could the price of Wegovy drop to $150?
On Friday, Oct. 17, President Donald Trump made remarks regarding cutting the price of some drugs during a White House event, and later specified that he was talking about Ozempic. Trump said he planned to bring the cost down to $150. The medicine normally costs around $1,000 per month out of pocket right now, although Novo Nordisk recently started offering it for about half the price to attract more cash-paying patients.
It's worth pointing out, though, that Dr. Mehmet Oz, the administrator of the U.S. Centers for Medicare and Medicaid Services (CMS), quickly stepped in to point out that the administration has not yet negotiated the price of GLP-1 drugs. While Trump remains adamant that these price drops will happen, Dr. Oz is likely better versed in what is actually happening in that department.
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What does this mean for Novo Nordisk?
Novo Nordisk announced it would significantly cut the prices of some of its insulin products back in 2023, following years of public pressure and a similar move by its competitors. But by then, these medicines no longer featured prominently in the company's growth plans, so it wasn't that hard of a decision. Novo Nordisk will likely seek to do the same here. It will protect its semaglutide empire as much as possible until it no longer matters to its prospects, or until it encounters a patent cliff. What does this mean for the company?
The CMS is currently negotiating the prices of Novo Nordisk's Ozempic, Wegovy, and Rybelsus, which all share the same active ingredient, semaglutide. It's not clear whether these negotiations are what Trump was talking about, but in my view, the president's comments change very little about the pharmaceutical giant's outlook. For one, whatever price the CMS sets for these drugs applies to Medicare-covered patients.
Second, various versions of semaglutide have received label expansions in important indications, which will help boost its sales. Third, Novo Nordisk is inching closer to launching newer GLP-1 medicines. The company's CagriSema, which proved more effective than semaglutide in studies, could earn approval in the next two years. These factors, along with others, should help Novo Nordisk navigate the current situation. The stock remains attractive at current levels.
