Novo is buying Chinese obesity drugs, but its record high is a long way off

Novo Nordisk will pay up to $2.6bn to Jiangsu Hengrui Pharmaceuticals for the rights to HRS-1596, an experimental weight-loss pill, Reuters reported on 29 September. Hengrui gets $300m up front and up to $2.3bn more if the drug meets development, regulatory and sales goals. Novo gets the rights everywhere except mainland China, Hong Kong, Macao and Taiwan. It is Novo’s second deal for a GLP-1 drug from a Chinese company, after UBT251 from United Laboratories.

The drug is at a very early stage. China has approved it only to begin the first phase of clinical trials. Novo said it could become a pill taken once a week, which would “substantially reduce dosing frequency and improve convenience compared with current offerings”. The deal is unlikely to change the competition in the near term, BMO Capital Markets said in a note.

How far the shares have fallen

Novo’s US-listed shares closed at $37.91 on 30 September. They are down more than 70% from their record, set after Wegovy had lifted Novo’s value above $600bn. To get back there, the shares would have to more than triple.

Investors were not impressed by the plan that Novo presented on 21 September. At its capital markets day in London, the company promised more than five blockbuster drugs by 2030 and more than 150 billion Danish crowns ($23bn) of sales from its pipeline in 2035. The shares fell as much as 9% that day, Reuters reported, as analysts asked whether new drugs can keep high prices once semaglutide, the ingredient in Wegovy and Ozempic, loses its patents. Novo’s staff departures have reached 13,000 since it started to cut costs last year. Markus Manns of Union Investment called the 2030 targets “slightly underwhelming”, and said of the Hengrui deal that Novo needs larger deals for more advanced drugs to change how the market sees it.

Similar results, lower prices

The first problem is Lilly. In a trial that compared the two drugs directly, patients on Lilly’s tirzepatide lost 20.2% of their weight on average after 72 weeks, against 13.7% on Wegovy, Lilly reported. Lilly’s injection, Zepbound, is on track to outsell Wegovy by more than $7bn this year, according to LSEG data. In pills, the two companies now fight on price in the US. Lilly sells its Foundayo pill directly to patients from $149 a month for the starting dose, GEN reported, in what it called a price war with Novo’s Wegovy pill.

The second problem is generics. Novo’s patent on semaglutide expired in India on 20 March, and local drugmakers launched copies within days, at up to 80% below Novo’s price, CNBC reported. Investors expect copies in Canada, Brazil and China too, Manns said.

Semaglutide in India, price a month, thousand rupees. Source: CNBC, 23 March 2026. Novo’s retail price is the low end of its range of 8,800 to 10,000 rupees; Dr. Reddy’s price is for its diabetes product.

Novo Nordisk	8.80
Dr. Reddy’s	4.20
Sun Pharma	3.40
Alkem	1.80
Natco	1.25

Source: CNBC, 23 March 2026. Novo’s retail price is the low end of its range of 8,800 to 10,000 rupees; Dr. Reddy’s price is for its diabetes product.The Macro Notebook

Why China

The deal with Hengrui is also a bet on where the next cheap, effective drugs will come from. Nearly 250 Chinese GLP-1 candidates are in development, according to the data provider Pharmcube, and AstraZeneca, Merck and Pfizer have all licensed drugs from Chinese developers. In a trial, UBT251, the drug Novo is developing with United Laboratories, produced an average weight loss of up to 19.7% after 24 weeks.

Chinese drugmakers are not yet global rivals. Aradhana Sarin, the finance chief of AstraZeneca, said in July that they are about a decade away from challenging the industry leaders worldwide, but that it was “only a question of time”, Semafor reported. By licensing their drugs now, Novo gets access to that research before the Chinese companies can sell it abroad themselves.

What would bring the shares back

A return to the record would need growth that Novo does not now promise. Its 2030 plan assumes stable margins, not rising ones. The drugs that could change that are years away: Novo plans to launch CagriSema, its combination injection, early next year, and a high-dose version and standalone cagrilintide in 2028. HRS-1596 has only been cleared to begin its first trials, in China. Until one of these beats Lilly’s drugs by a clear margin, or until Novo shows that it can hold its prices as the generics spread, a return to the old highs looks far off.