Novo's Next Act & What Happened to Nike?

Brew Markets

The episode explores major strategic shifts within global corporations, beginning with Novo Nordisk's efforts to navigate patent expirations and

Key takeaways

• Novo Nordisk faces a patent cliff for semaglutide in 2032 and aims to drive $23 billion in pipeline sales by 2035.
• Nike's market capitalization has dropped from a peak of $260 billion in November 2021 to nearly $50 billion today.

Main topics

• Novo Nordisk's pharmaceutical pivot
• Nike's S&P 100 removal and strategy failure

Notable quotes

It's not going to come down to Coke versus Pepsi. It's going to be Coke and Pepsi and Fanta and Dr. Pepper and Red Bull.

Conclusion

The episode highlights the volatility of market leadership when compan

Transcript preview

Speaker 1 (0:03) Amazon just told Meta's new AI agent to go muse somewhere else. And the story behind Novo's slimming market cap. From Monday, September 21st, it's Brew Markets Daily. I'm Jon Croteau. And I'm Dylan Lewis. Let's Speaker 2 (0:15) get moving and grooving. Speaker 1 (0:22) All right, Dylan, we've got an update on Paramount Warner Brothers, Amazon's reaction to Meta's new AI agent, and of course, what is going on at Nike. But let's kick off the show with you on Uncovering Denmark. Speaker 2 (0:34) Yeah, weight loss drug Wagovi made Novo Nordisk one of the most valuable companies in Europe, the pride of Denmark, really. But now the stock is down 70 % since mid-2024 as investors are asking management, what's next? That's because the company is currently in a sales crisis. Full-year expectations are for revenue to be flat to maybe down 6%. Part of that is competition from Eli Lilly's Zepbound. Their weight loss treatment is expected to outsell Novo's Will Govee this year. And investors are concerned because the semaglutide patent expires in the early 2030s, meaning that even more competition is coming. The company held its capital markets day today in London. John, what did we learn about management's plans? Speaker 1 (1:13) Some quick numbers. As you mentioned, the semi-glutide patent expires in 2032 in the United States. This is so important because half the company's revenue is tied to those patents. Analysts are looking for a plan on how to replace that revenue as the market matures. And for its part, management proposed a multi-part plan. They want to launch at least five drugs with, quote, multi-blockbuster potential by 2030 and drive $23 billion in pipeline sales by 2035. And the company is also looking to slim down. Since taking over as CEO in August 2025, Mike Dustar has cut Novo's workforce by about 13,000 people. That's nearly 17%. And keeping with this slimming down pun, the company officially scaled back its name from Novo Nordisk. to simply Novo. And the bull that has been part of its logo for 100 years is now facing right instead of left, which I saw one brand strategy expert say signals a change in directions, but I think that's pretty thin. Speaker 2 (2:13) I mean, up and to the right is the way you want charts moving, John. I kind of understand it. Nova is fascinating to me because they built one of the biggest markets in healthcare with the GLP-1s, and they are basically flat from when they introduced the drugs and they started selling them. I mentioned Eli Lilly earlier, and they also have a revenue concentration problem. Roughly two-thirds of their sales come from their trisepatide offerings, and yet Lilly is trading near all-time highs, and the business is worth over a trillion dollars. And that is because their ZepBound medication is currently outselling Novo's Wagovi. I am no scientist, but the researchers that have studied the drugs against each other have found that people on Zetbound lost more weight than those on Wegovy, about 20 % of starting weight versus 14%. And the theory here is that Wegovy mainly targets GLP-1s, while Zetbound targets both GLP-1 and GIP receptors. This dual hormone effect helps assist with more weight loss. Both businesses are very highly reliant on this market. but investors see that patients are choosing Lilly's treatments right now. I think one thing that we should probably keep our eye on here is how the drugs are delivered. Novo has a pill form of Ligovie. Eli Lilly has Foundeo, which is a daily pill treatment. Those are generally more preferable ways for patients to get drugs. So if we see a meaningful difference in how those perform. That could change the story for these companies. Yeah, Speaker 1 (3:32) I thought the pill would be more of a breakthrough. Over the last couple of years when I've seen friends and family have needles around the house and these drugs that are frozen in the fridge have to be delivered, when the pill came out, I thought that was going to be a real promise. But I suppose it's important to the patient which one loses more weight faster. So Dylan, this competition between Novo and Eli seems unique in the pharma scheme. Of course, they're both dealing with pipelines and patent cliffs like any other pharmaceutical company, but there's such a large base of consumers who want these weight loss drugs. We recently talked about the company Novartis having disappointing results for some of their stage three trials. Those were more focused on targeted treatments for cardiovascular disease and neurological disorders. And while those potential drugs would be very important and make a big difference in the lives of those who it would treat, it only would treat thousands or even millions of people. The World Health Organization says that one billion people worldwide live with obesity. So that's an enormous market for these companies. And when asked about Novo versus Eli Lilly addressing the market and shots versus pills, Novo's CEO said it's not going to come down to Coke versus Pepsi. It's going to be Coke and Pepsi and Fanta and Dr. Pepper and Red Bull. That's his way of saying that he's ready for the competitive landscape and also maybe promoting sodas, which sometimes lead to obesity. Speaker 2 (4:58) It sounds like our fridges and freezers are going to get a little bit busier, John, between the treatments themselves and the sodas that people are drinking. All right. In a moment, we're going to talk Nike, why the sportswear giant just got booted from the S &P 100 and how it lost nearly 80 % of its market value along the way. But first, this episode is brought to you by Charles Schwab. Time in the market, fighting inflation, balancing risk. No one says financial decisions are easy. In fact, it's the exact opposite. Financial decisions can be really tricky. and it's often your own thinking that can lead you astray. Financial Decoder, an original podcast from Charles Schwab, can help. Speaker 1 (5:31) Join host Mark Rippey, head of the Schwab Center for Financial Research, as he offers modern strategies to help combat the, wait, what in our head? Mental traps like overconfidence, loss aversion, and recency bias may cloud your investing decisions. When you understand these patterns, you can take steps to make better informed financial decisions. Listen at schwab.com slash financial decoder or wherever you get your podcasts. That's schwab.com slash financial decoder. Speaker 1 (5:58) All right, Dylan, moving on. Something happened today for the first time in 18 years. As the markets opened for the day, Nike was not included in the S &P 100. The index committee that decides who counts as a blue