Novo Nordisk’s (NVO) CEO Is Not Worried About Government Price Negotiations

Novo Nordisk (NVO), a pharmaceutical company, isn’t too worried about the U.S. government’s plan to negotiate prices for its popular diabetes and weight loss medicines, including Wegovy and Ozempic. This is because CEO Lars Jørgensen believes that the prices are already similar to those in Europe. In addition, the company has experience with negotiations since Novo Nordisk has already gone through a similar process with its insulin products.

The U.S. government started negotiating prices for certain medicines last year as part of the Inflation Reduction Act. This program aims to reduce the cost of prescription medicines for Medicare patients. Novo Nordisk’s medicines are now on the list of drugs subject to price negotiations. However, it’s unclear what will happen to this program in the future, especially under the new administration. As a result, Jørgensen is taking a wait-and-see approach.

Nevertheless, it is worth mentioning that most of Novo Nordisk’s sales come from private insurance companies and customers rather than the government. In fact, the firm’s commercial market sales account for about 50% of its GLP-1 sales. Furthermore, Novo Nordisk is developing several new treatments in order to stay ahead in the market, such as CagriSema and amycretin, which are in mid to late-stage trials. These new medicines could help the company maintain its market share and revenue growth.

Is NVO Stock a Buy or Sell?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on NVO stock based on five Buys, two Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 27% decline in its share price over the past year, the average NVO price target of $100.10 per share implies 16.6% upside potential.

See more NVO analyst ratings