Shares in Novo Nordisk (NVO 6.09%) were up 6% by 11:30 a.m. on Wednesday. The move comes after Pfizer‘s agreement with the Trump administration raised hopes that other pharmaceutical companies, including Novo Nordisk, could reach similar terms.

Trump’s pharmaceutical tariffs

The administration aims to bring pharmaceutical manufacturing back to the U.S. President Donald Trump’s threat of 100% tariffs “on any branded or patented Pharmaceutical Product,” which he made in a Truth Social post, is targeted at pharmaceutical companies, domestic or otherwise, that manufacture drugs abroad and import them for sale in the U.S.

However, Pfizer said that today’s agreement grants the company a three-year grace period before the tariffs are applied, on the condition that it invests more in manufacturing in the U.S. The company said that it voluntarily “agreed to implement measures designed to ensure Americans receive comparable drug prices to those available in other developed countries.”

What it means to Novo Nordisk investors

Although Novo Nordisk is a European company, it has a substantial manufacturing presence in North Carolina and is making a $4.1 billion investment to expand its manufacturing in the state. Furthermore, Commerce Secretary Howard Lutnick has stated that the administration will not impose the tariffs until negotiations with pharmaceutical companies are completed.

The news raises hopes that Novo Nordisk could reach a similar deal, and it comes at a time when the company is hoping to receive approval to market an oral weight loss drug — one great reason to buy the stock in 2025.

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.

Danish pharmaceutical giant Novo Nordisk (NVO -0.16%) recently turned a lot of heads with exciting news regarding Wegovy, its anti-obesity treatment.

Results of the Steer study showed that treatment with Wegovy reduced patients’ risk of heart attack, stroke, or death from any cause by 57%, compared with Eli Lilly‘s (LLY 0.25%) Zepbound.

A big risk reduction is the sort of thing that gets the attention of physicians who must choose between prescribing Wegovy or Zepbound. With this in mind, many investors are assuming the Steer study makes Novo Nordisk a screaming buy right now.

Before logging in to your brokerage application to fill your portfolio with Novo Nordisk shares, let’s cover some important details that investors new to the pharmaceutical industry might have missed.

Proof of superiority?

The Steer study was not a traditional clinical trial that enrolled thousands of patients and randomized them to receive either Wegovy or Zepbound. It was a “real world” study gathered from patient experiences.

Zepbound is known to reduce weight faster than Wegovy, but the increased efficacy comes with a cost. Zepbound, as a dual agonist of GLP-1 and GIP receptors, isn’t as easily tolerated as Wegovy, which only acts on GLP-1 receptors. The benefit observed could have more to do with factors that persuaded patients, and their physicians, to choose Wegovy or Zepbound in the first place.

The 57% risk reduction was observed among patients who stayed on treatment. As it’s a less easily tolerated drug, though, we can expect a significantly higher percentage of Zepbound patients to discontinue treatment before receiving any cardiovascular risk reduction benefit. Wegovy’s cardiovascular risk reduction compared with Zepbound fell to 29% once the Steer study adjusted for treatment gaps.

Finally, the Steer study results include 4.3 months of follow-up observation for patients on Zepbound but just 3.8 months for patients on Wegovy. There were 15 cardiovascular events recorded among patients taking Wegovy compared to 39 among patients on Zepbound. A significantly longer follow-up period for patients on Zepbound is at least partly responsible for the higher rate of observed cardiovascular events.

Plenty of room for Wegovy

The Food and Drug Administration approved tirzepatide, the active ingredient in Zepbound, in 2022. Semaglutide, the active ingredient in Wegovy, was first approved about four and a half years earlier.

In the first half of 2025, total semaglutide sales reached a whopping $17.7 billion. Eli Lilly’s tirzepatide is hot on semaglutide’s heels, with total sales that reached $14.7 billion in the first half.

While tirzepatide will probably continue to gain market share, there’s going to be plenty of room for semaglutide sales to continue climbing. The overall market for GLP-1 drugs is expected to reach $150 billion by 2030, and we’re going to need an option that’s more easily tolerated than tirzepatide.

The real-world Steer study won’t do half as much to persuade physicians to prescribe semaglutide as the Select clinical trial from a couple of years ago did. Patients randomized to receive semaglutide showed a 20% reduction in their risk of heart attack or stroke compared with the placebo group. Semaglutide is also the only GLP-1 currently approved to treat metabolic dysfunction-associated steatohepatitis, an obesity-related liver condition that affects millions of Americans.

A bargain now

In the first half of 2025, Novo Nordisk reported sales that rose 16% year over year. More encouraging was an operating profit that soared by 25% year over year.

Novo Nordisk’s stock price has been beaten down because management warned of a slowdown. In August, the company told us to expect operating profit to grow by 10% to 16% in 2025 if we ignore currency exchange rates.

After falling hard this year, Novo Nordisk stock is trading at the low valuation of just 14.6 times forward-looking earnings expectations. That’s an appropriate valuation for a company you expect to grow earnings by a mid-single-digit percentage over the long run. Novo Nordisk signaled a slowdown, but earnings growth at a double-digit percentage still seems likely over the next several years. Scooping up some shares at their beaten-down price seems like the right move for most investors.