Why Deutsche Bank Cut Novo Nordisk to Sell Despite a Better Q2

Deutsche Bank’s decision to downgrade Novo Nordisk from Hold to Sell was driven by a worsening long-term growth case. The bank lowered its price target by 9%, from DKK 290 to DKK 265, citing doubts about a return to growth in 2027, limited upside from U.S. Medicare prescriptions, pipeline setbacks and a substantial future patent-cliff risk. 171819

The central question is no longer whether Novo can produce a solid quarter. It is whether oral Wegovy, international expansion and replacement products can sustain profitable growth as the company’s semaglutide franchise faces heavier competition and eventual patent expiries.

Why Deutsche Bank turned bearish

Deutsche Bank’s concerns span several years rather than one earnings report. Analyst Emmanuel Papadakis pointed to uncertainty over a meaningful 2027 recovery and said the potential boost from Medicare prescriptions appears limited. The bank also reduced its medium-term revenue expectations by a high-single-digit percentage, according to reports on the downgrade. 1719

Novo’s pipeline has become a larger part of that debate. Ziltivekimab, an anti-inflammatory cardiovascular candidate, failed to reduce the risk of heart attack or stroke in a late-stage trial, leaving the drug “effectively out of the picture” in Deutsche Bank’s assessment. 17 Investors also reacted negatively to a setback involving CagriSema, Novo’s next-generation obesity treatment, during the company’s second-quarter reporting period. 1

Those failures matter because Novo needs new products to complement or eventually replace growth from semaglutide-based medicines such as Wegovy and Ozempic. If the pipeline is less capable than previously expected, the company may have fewer ways to offset slower volumes, lower prices and future loss of exclusivity.

Novo’s Q2 results were better—but not clean enough

Novo’s second-quarter numbers supported both the bullish and bearish cases. Adjusted sales rose 7% at constant exchange rates, while adjusted operating profit increased 11%. The company also raised its full-year 2026 outlook, now expecting adjusted sales and operating profit growth of between 0% and -6% at constant exchange rates, an improvement from its previous range. 714

But investors focused on the weaker signals. Oral Wegovy generated DKK 3.22 billion in second-quarter sales, slightly below the approximately DKK 3.27 billion analysts had expected. 10 The miss was narrow, but it raised questions about launch momentum, pricing and how quickly the pill can compensate for pressure elsewhere in the portfolio.

The combination of higher volumes and lower realized prices is particularly important. Novo reported that Q2 growth was partly offset by lower prices, while U.S. pricing and access conditions remained headwinds. 14 That makes revenue growth harder to translate into sustained earnings growth, even when demand for GLP-1 treatments remains strong.

Why the 2027 rebound is under scrutiny

Novo reported DKK 309.1 billion in 2025 sales. External estimates cited in market coverage put revenue at roughly DKK 299 billion in 2026 and DKK 304.25 billion in 2027. On that path, a 2027 recovery would still leave sales below the 2025 base rather than restoring the company to its previous growth trajectory.

These estimates are not Novo’s guidance: the company’s official 2026 outlook is expressed as a constant-currency growth range. The distinction matters because consensus forecasts can change, while company guidance reflects management’s current expectations. Still, the gap illustrates Deutsche Bank’s concern that a return to growth may be modest and delayed.

China offers upside, but Lilly is already competing

China could provide a new market for oral Wegovy. In August, China’s drug regulator accepted Novo’s marketing application for the pill. That advances the product through the regulatory process, but it is not the same as approval or commercial launch. 3

The opportunity is potentially large: J.P. Morgan estimates that China’s weight-management GLP-1 market could reach 30 billion yuan within five to seven years, although that is an external forecast rather than a guaranteed outcome. 6

Novo will not enter an uncontested market. Eli Lilly has also submitted an application for oral orforglipron in China, and the company has indicated that the drug could launch as soon as late 2026 or early 2027. 34 China may therefore become an important opportunity, but it may also intensify the same competition that is already pressuring Novo elsewhere.

What investors will watch next

Novo’s Capital Markets Day on September 21, 2026, is scheduled to cover strategy, research and development, operations and financial performance. Investors are likely to focus on four practical questions:

• Can oral Wegovy maintain demand without sacrificing too much price?
• When could China approval and launch contribute meaningful revenue?
• Does Novo’s pipeline offer products differentiated enough to compete with Eli Lilly and other GLP-1 developers?
• How will management replace semaglutide revenue when patent protection weakens?

The share-price decline alone does not prove that Novo must fall further. Deutsche Bank’s Sell rating instead reflects a more specific judgment: the evidence is not yet strong enough to assume that oral Wegovy and China can deliver durable growth before competition, pricing pressure and patent expiries weigh on the core business.