Morgan Stanley cut Novo Nordisk A/S to Underweight on September 11, 2026. Semaglutide, the active ingredient in drugs like Wegovy and Ozempic, accounts for about 75% of the company’s sales in 2026, according to the investment bank. Morgan Stanley estimates that semaglutide could still make up 59% of total sales in 2031. The firm believes that the current valuation does not fully reflect how much semaglutide contributes to Novo’s long-term value.
Novo shares were trading at about 10.6 times earnings and were down about 33% from their 52-week high when the analysis was published. Shares fell about 2% after Morgan Stanley issued its downgrade.
The debate now is not whether the patent cliff will happen, but whether a roughly 10x earnings multiple already reflects much of that risk, according to an analysis published by Insider Monkey and carried by Yahoo Finance.
The bear case assumes that important semaglutide patent protections will begin expiring in Europe around 2031 and in the United States around 2032. Morgan Stanley estimates that Novo’s oral-obesity business could reach $10 billion by 2031 but may not be enough to offset pricing pressure and generic competition. The bank expects revenue and EBIT growth of about 2% to 3% in 2027 and a compound annual growth rate of roughly 4% through 2030.
If that slowdown continues, a lower earnings multiple could prove justified rather than signaling that the shares are unusually cheap. Morgan Stanley said the valuation does not fully reflect the effect of the semaglutide patent cliff on Novo’s long-term value.
Patent expiration dates can also be difficult to predict precisely because different patents and regulatory protections can expire at different times in different markets.
Another question is whether oral semaglutide must carry the company until new products arrive. Novo Nordisk’s next-generation pipeline includes CagriSema and other amylin-based treatments that could help reduce the company’s dependence on semaglutide.
However, this defense remains unproven. CagriSema suffered a major setback after trial results disappointed investors earlier in 2026. Reuters reported that analysts and investors have called on Novo to strengthen its pipeline and look beyond its current obesity and diabetes drugs.
The company is also advancing newer treatments including zenagamtide and continuing research involving CagriSema. Novo plans to present additional data on its amylin-based pipeline at the European Association for the Study of Diabetes meeting later this month.
On September 7, the STEP Young phase 3 trial met its primary endpoint in children ages six to under 12 with obesity. Novo said 40.4% of children treated with semaglutide were no longer classified as having obesity after 68 weeks compared with none in the placebo group. Both groups also received lifestyle modifications.
Contrarian investors are buying Novo Nordisk shares despite growing concerns about its long-term growth. According to Insider Monkey data, 59 hedge funds held NVO in the second quarter of 2026, up from 55 in the first quarter.
The increase does not mean all large investors are becoming more bullish. Fisher Asset Management reduced its Novo position by 8% during the second quarter while Arrowstreet Capital increased its stake by 6%, according to Insider Monkey.
Novo is also facing stronger competition from Eli Lilly. Reuters reported that analysts expect Lilly’s Zepbound sales to exceed Wegovy sales by more than $7 billion this year. Novo’s Wegovy pill has provided some momentum, but analysts interviewed by Reuters said it may offer only temporary protection before semaglutide patents begin expiring.
The stock’s current valuation depends heavily on how quickly Novo can develop new products and reduce its reliance on semaglutide.
IMAGE: Author News Øresund – Johan Wessman CC3