Shares of Danish drugmaker Novo Nordisk NVO suffered a sharp slump of 15% on the bourses on Tuesday, after the company issued a conservative sales outlook that implied a 5-13% decline in 2026 from last year. This news also triggered a broader selloff in the obesity drug industry.<\/p>\n
It is also worth noting that the day after releasing this sales outlook, NVO announced strategic moves, such as appointing Jamey Millar to lead its U.S. business and launching a sizable share repurchase program, signaling a strong focus on long-term stability.<\/p>\n
Considering these recent developments, along with the drugmaker\u2019s 2025 Annual Report highlighting efforts to expand patient reach through the new Wegovy pill, the recent pullback presents a compelling opportunity for investors to keep NVO-heavy exchange-traded funds (ETFs), such as the Roundhill GLP-1 & Weight Loss ETF (OZEM), on their watchlists for potential entry points.<\/p>\n
Before suggesting additional ETFs that offer exposure to NVO and other industry leaders, let us first analyze what led Novo Nordisk to issue such a dismal outlook and why investors might prefer ETFs over the stock itself. This should help you make a more informed decision.<\/p>\n
Novo Nordisk\u2019s underwhelming top-line outlook for the year primarily stems from several structural challenges:<\/p>\n
\u2022\u00a0 \u00a0 Intensifying U.S. Pricing Pressure: A primary driver is the impact of the “Most Favored Nations” (MFN) agreement and broader U.S. government efforts to lower drug prices. These measures are forcing pricing concessions on NVO\u2019s injectable GLP-1 drugs, which are weighing heavily on revenues. The company also said it expects sales within its U.S. operations to decline due to lower realized prices, exacerbated by the MFN agreement with the U.S. administration aimed at bringing GLP-1 therapies to more Americans at lower costs.<\/p>\n
\u2022\u00a0 \u00a0 Growing Market Competition: The obesity and diabetes treatment landscape is becoming increasingly crowded. Novo Nordisk faces stiff competition from rivals like Eli Lilly LLY, and new entrants are vying for market share, exacerbating pricing pressures.<\/p>\n
\u2022\u00a0 \u00a0 Patent Expirations: The company noted that the patent expiry of its semaglutide molecule in key international markets like China and Brazil will also contribute to its sales decline in 2026.<\/p>\n
Despite near-term revenue pressure, NVO\u2019s balance sheet remains robust, with strong free cash flow and substantial capital returned to shareholders in recent years, including approximately $8.45 billion (DKK 53.36 billion) in 2025 via dividends and buybacks. The company ended last year with a robust free cash flow worth $4.48 billion (DKK 28.3 billion) against a free cash outflow of $2.33 billion (DKK 14.7 billion) in 2024 (as cited in NVO\u2019s 2025 annual report). This financial strength directly enables strategic actions like the newly announced share buyback program.<\/p>\n
Story Continues <\/p>\n
Moreover, the company expects its global GLP-1 market expansion to continue this year, enabling Novo Nordisk to increase patient reach and expand volumes, as it continues to roll out Wegovy in more markets and expects to introduce the 7.2 mg dose in several countries.\u00a0\u00a0
On the other hand, the appointment of Jamey Millar to lead the U.S. business is a critical strategic pivot. With the United States representing Novo Nordisk\u2019s largest market, the new leadership will likely be tasked with navigating a complex pricing environment and executing the launch of newer products, such as the promising oral version of Wegovy. These measures should help keep the stock on a recovery path once pricing resets are absorbed.<\/p>\n
Considering the aforementioned discussion factors, investors may be tempted to add NVO to their portfolios immediately. However, given the significant competitive and regulatory challenges, adding a direct stock to your portfolio carries heightened risk.<\/p>\n
A more measured approach for investors will thus be to have diversified ETFs, as mentioned below, with significant NVO weighting in their watchlists, allowing for managed exposure to the company’s recovery potential while mitigating single-stock volatility.<\/p>\n
Roundhill GLP-1 & Weight Loss ETF OZEM<\/p>\n
This is an actively managed fund, with assets under management (AUM) worth $57.6 million, offering exposure to 24 companies tackling obesity and supporting weight loss through ground-breaking drug development and innovation. NVO holds the first position in this fund, with 19.27% weightage. Drugmakers LLY and Structure Therapeutics GPCR hold the second and third positions in this fund, with 14.80% and 4.85% weightage, respectively.<\/p>\n
OZEM has surged 41.2% over the past year. The fund charges 59 basis points (bps) as fees.<\/p>\n
Amplify Weight Loss Drug & Treatment ETF THNR<\/p>\n
This fund, with net assets worth $3.9 million, offers exposure to 20 global companies expected to economically benefit from weight loss drug development. NVO holds the first position in this fund, with 12.11% weightage. LLY and Amgen AMGN hold the second and third positions in this fund, with 11.95% and 6.88% weightage, respectively.<\/p>\n
THNR has soared 12.4% over the past year. The fund charges 59 bps as fees.<\/p>\n
VanEck Pharmaceutical ETF PPH<\/p>\n
This fund, with net assets worth $1.15 billion, offers exposure to 27 companies involved in pharmaceuticals, including pharmaceutical research and development as well as production, marketing and sales of pharmaceuticals. NVO holds the fourth position in this fund, with 7.12% weightage. LLY and Novartis NVS hold the second and third positions in this fund, with 19.27% and 10.49% weightage, respectively.<\/p>\n
PPH has rallied 19.9% over the past year. The fund charges 36 bps as fees.\u00a0<\/p>\n
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report<\/a><\/p>\n Novartis AG (NVS) : Free Stock Analysis Report<\/a><\/p>\n Novo Nordisk A\/S (NVO) : Free Stock Analysis Report<\/a><\/p>\n Eli Lilly and Company (LLY) : Free Stock Analysis Report<\/a><\/p>\n Amgen Inc. (AMGN) : Free Stock Analysis Report<\/a><\/p>\n VanEck Pharmaceutical ETF (PPH): ETF Research Reports<\/a><\/p>\n Structure Therapeutics Inc. Sponsored ADR (GPCR) : Free Stock Analysis Report<\/a><\/p>\n Amplify Weight Loss Drug & Treatment ETF (THNR): ETF Research Reports<\/a><\/p>\n Roundhill GLP-1 & Weight Loss ETF (OZEM): ETF Research Reports<\/a><\/p>\n This article originally published on Zacks Investment Research (zacks.com).<\/a><\/p>\n