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Novo announced yesterday they're cutting Wegovy list prices 50% and Ozempic prices up to 40%. This came one day after CagriSema — their next-gen obesity drug that was supposed to close the gap on Lilly's Zepbound — missed the primary endpoint in a head-to-head trial. NVO is down 60% from its 2024 peak. Copenhagen shares at their lowest since June 2021.
**I went back and found every major case of a company cutting flagship product prices 30%+ under pressure and tracked what happened to the stock.**
12 cases going back to 2014. Pharma, tech, auto, consumer. For each one I tracked what they cut, how the market reacted day one, and where the stock was a year later.
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Of the 12 cases, roughly half recovered and half didn't. The split maps to one thing: whether the product being cut was the company's main growth driver or a side business.
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The companies that recovered had one thing in common: the product being cut was not their primary growth driver. Lilly cut insulin 70% in March 2023 — biggest percentage cut on the list. Market loved it. Stock went up 1.2% that day and finished 2023 up 59%. Insulin was maybe 10% of Lilly's revenue and shrinking. The growth engine was Mounjaro and Zepbound which were just getting started. Lilly sacrificed a small declining product, earned political goodwill, and the GLP-1 franchise did the rest. Novo and Sanofi followed two weeks later with even steeper insulin cuts. Neither stock moved. Being the follower got them nothing.
Tesla did the same thing differently. Musk cut Model Y and Model 3 prices up to 20% in January 2023. Gross margins fell from 25% to 18%. Profits dropped 44% year over year by Q3. But the stock doubled from its trough that year — cheaper cars meant more deliveries and Musk pivoted to the autonomy pitch.
Netflix lost 970,000 subscribers in Q2 2022 and the stock fell 51% for the year. They cut emerging market prices up to 50%, launched a $6.99 ad tier, cracked down on password sharing. Added 7.6 million subscribers in Q4 2022 alone. From the trough the stock went +344% through late 2024.
Mylan had raised EpiPen prices from $103 to $608 over seven years. A 488% increase. When Congress hauled CEO Heather Bresch in she went on CNBC and said "no one's more frustrated than me." They launched a half-price generic at $300. Stock fell 29% that year. It never recovered to 2016 levels. Mylan eventually merged with Pfizer's off-patent unit to form Viatris and the brand was gone.
Gilead is the closest comparison to Novo. Sovaldi and Harvoni were blockbuster hepatitis C drugs — $19 billion in peak revenue. Then AbbVie launched a cheaper competitor, Express Scripts dropped Harvoni from its formulary, Congress investigated the pricing. Gilead responded with steep rebates — 40 to 60% effective net price cuts over the next two years. Revenue went $19.1B to $14.8B to $9.0B to $3.7B over four years. Stock lost 29% in 2016 and didn't recover to its 2015 highs for five years. The drug cured the disease which meant every treated patient was a permanently lost customer.
Peloton cut bike prices 24% as gyms reopened and the at-home fitness boom ended. Stock went from $170 at the pandemic peak to under $8. Still under $5 today.
In every recovery case the product being cut was a small or declining part of the business — Lilly's insulin, Tesla's margin on base models, Apple's China iPhone pricing. In every case where the stock kept falling the product being cut was the main growth driver and there was no replacement ready.
Wegovy and Ozempic are roughly 70% of Novo's growth. CagriSema was supposed to be the next generation. CEO Lars Fruergaard Jørgensen stepped down. Seven analysts downgraded the stock in two days.
Eli Lilly cut insulin because insulin wasn't the future — GLP-1s were. Novo is cutting prices on GLP-1 drugs while Lilly is gaining prescriptions in the same market. Lilly's stock finished 2023 up 59%. Novo is down 60% from its peak with no ready replacement for CagriSema.
**Positions:** No position in NVO