Novo Nordisk (NYSE: NVO) is inching down on market open today after President Donald Trump said pharma tariffs could hit 250% as he continues to push for drug manufacturing to return to the US.
In an interview with CNBC this morning, President Trump confirmed that plans of beginning with a “small tariff”, followed by an increase to 150% within a year, and then up further from there over time.
The announcement sent ripples through pharmaceutical stocks, which are already grappling with pricing reforms and supply chain disruptions – even making UBS analyst Matthew Weston downgrade Novo Nordisk stock to “neutral”.
Weston’s dovish call on NVO shares is significant given they’re already down nearly 50% versus their year-to-date high in early March.
What pharma tariffs mean for Novo Nordisk stock
The possibility of triple-digit tariffs on imported drugs brings added uncertainty to Novo Nordisk, given its blockbuster obesity and diabetes treatments, Wegovy and Ozempic, are heavily reliant on US sales.
While the Danish firm has manufacturing capacity in the United States, its global supply chain, nonetheless, remains exposed to trade policy shocks.
According to experts, if Trump’s “most favoured nation” pricing policy is enforced alongside steep tariffs, NVO could be forced to sell its portfolio at European price levels – meaningfully eroding margins.
Though CEO Lars Fruergaard Jørgensen previously stated the company is “well-positioned” to handle tariff risks, investors remain wary of the long-term impact on profitability, pricing power, and the NVO share price.
Why else did UBS downgrade NVO
UBS analyst Matthew Weston downgraded Novo Nordisk shares and lowered his price objective sharply to about $52 only also due to the “rapidly deteriorating growth profile” of the firm’s GLP-1 portfolio.
Despite strong brand recognition, Ozempic has plateaued early, while peer Lilly’s Mounjaro and Zepbound have gained favour among physicians.
UBS also cited poor commercial execution and weak uptake in insured channels for its dovish call on NVO stock.
Compounded GLP-1 alternatives continue to undercut Novo’s market share – and the management has already warned Medicare reimbursement tied to European pricing could “significant reduce value,” the analyst added.
Is there still reason to invest in Novo Nordisk here?
Novo Nordisk’s leadership transition – effective August 7th – comes at a pivotal moment.
Incoming chief executive Maziar Mike Doustdar inherits a business facing regulatory headwinds, competitive erosion, and investor skepticism.
While Novo retains dominance in diabetes care and a robust R&D pipeline, its obesity franchise is under pressure.
That said, other Wall Street firms seem to have confidence in new leadership’s ability to turn this ship around, given the consensus rating on Novo Nordisk stock remains at “overweight”.
A healthy dividend yield of 3.40% tied to NVO shares makes them somewhat more attractive to own – especially now that they’re trading at a year-to-date low.
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