Feb 23 - Novo Nordisk’s next-generation weight-loss candidate, CagriSema, was found to be less effective than Eli Lilly’s Zepbound in a head-to-head study, a setback that analysts say complicates Novo’s effort to reclaim its early advantage in the fast-growing obesity drug segment.
The trial at the center of the debate is REDEFINE-4. Market observers and sell-side analysts reacted quickly to the result, highlighting both immediate commercial implications and longer-term strategic questions for Novo.
Analyst reactions and strategic implications
Michael Leuchten of Jefferies noted that much of Novo’s long-term valuation is tied to amycretin, a GLP-1/amylin combination similar in therapeutic concept to CagriSema. He said the REDEFINE-4 outcome and the attendant commercial uncertainty relative to competing products do little to soothe investor concerns about the company’s terminal value. Leuchten added that investors are likely to pivot toward scrutiny of management’s mergers and acquisitions strategy. His firm’s forecasts imply the potential for up to $35 billion in M&A spending this year, and market feedback suggests investors would prefer deals in therapy areas outside obesity and diabetes so as to provide time to reinvest in the company’s obesity portfolio.
Evan David Seigerman at BMO Capital Markets expressed difficulty in identifying a clear prescribing rationale for CagriSema versus tirzepatide should Novo’s product gain approval and reach the market. He described the result as hard to frame as a win for Novo, noting it is striking that the company acknowledged a competitor’s drug outperformed in a trial it sponsored and designed. Seigerman argued that Novo needs more than a pill formulation tied to Wegovy to reverse its fortunes and called for a comprehensive strategy overhaul.
Chris Schott of J.P. Morgan characterized the outcome as confirming Zepbound’s current market leadership and positioning Eli Lilly for continued share gains over time. Schott said that while CagriSema could introduce greater competition into the market, dislodging Lilly’s share is expected to be difficult, and he anticipates Lilly will have a longer period of momentum for Zepbound beyond 2026.
Srikripa Devarakonda of Truist Securities acknowledged CagriSema’s potency and said the firm will continue to monitor additional trial data. Nevertheless, Devarakonda judged that the current data preserve Eli Lilly’s dominance in the obesity landscape at least in the near term. He cited a best-in-class profile for Lilly’s product, along with improving access, supply, and rising demand, as factors supporting Lilly’s position. On safety, Devarakonda noted discontinuation rates with tirzepatide were lower versus semaglutide in available data and said, based on data so far, CagriSema is unlikely to demonstrate a safety advantage over tirzepatide.
Courtney Breen at Bernstein emphasized the trial outcome underlines that Novo faces ongoing challenges and that Lilly has so far managed Novo’s competitive moves. Breen said the firm had been skeptical about Novo’s prospects to compete head-to-head with Lilly using CagriSema, pointing to manufacturing hurdles and limited incremental benefits over tirzepatide. She also noted that the expected launch of Lilly’s next-generation candidate, retatrutide, which has a higher efficacy, is likely to further constrain Novo’s commercial prospects.
James Gordon of Barclays said he still views CagriSema as approvable, but that the RD4 trial results will likely make market uptake an uphill battle against a more effective and better tolerated incumbent. Gordon concluded that Novo may be left competing primarily on price.
What this means for markets and strategy
Analysts consistently flagged increased commercial uncertainty for Novo as a direct consequence of the REDEFINE-4 outcome. Several recommended that investors will shift attention to management’s use of capital, with Jefferies explicitly citing a potential for substantial M&A activity this year as a mechanism to protect and extend corporate value while the obesity portfolio is reassessed. Across the commentary, the common thread is that Eli Lilly appears to hold a durable advantage for now, which could reshape competitive dynamics, prescribing decisions, and pricing pressure within the obesity therapeutics market.
Bottom line
The REDEFINE-4 head-to-head outcome is prompting investors and analysts to reassess Novo Nordisk’s competitive positioning and strategic options. With questions about CagriSema’s commercial appeal versus tirzepatide and concerns around manufacturing and limited incremental benefit, market participants expect scrutiny on potential M&A as management seeks to bolster long-term value.