Shares of Novo-Nordisk A/S (NVO) tumbled 5.70% in pre-market trading on Monday, as the Danish pharmaceutical giant faces a double whammy of challenges. The plunge comes in response to positive trial results from a competitor's weight loss drug and potential U.S. government action on drug pricing.

Eli Lilly, Novo-Nordisk's main rival in the obesity drug market, announced on Sunday that its drug Zepbound outperformed Novo-Nordisk's Wegovy in a head-to-head trial. The study, presented at the European Congress on Obesity, showed Zepbound's superiority across five weight-loss targets. Notably, Zepbound helped nearly 25% more participants lose over 15% of their weight compared to Wegovy and achieved a greater average waist circumference reduction. This development could significantly alter the competitive landscape in the rapidly growing obesity drug market, estimated to reach over $150 billion annually by the next decade.

Adding to Novo-Nordisk's woes, U.S. President Donald Trump announced plans to sign an executive order to cut prescription drug prices to match those of other high-income countries. This move, expected to be formalized later on Monday, could potentially cap pharma import prices rather than impose tariffs. Analysts suggest this could have "big ramifications" for pharmaceutical companies and their profits. The news has led to a broader sell-off in the pharmaceutical sector, with several major players experiencing significant pre-market declines.

As investors reassess Novo-Nordisk's market position and future growth prospects in light of these developments, the company faces increased pressure to maintain its competitive edge in the lucrative weight loss medication segment. The pre-market plunge reflects growing uncertainty about the company's ability to defend its market share against strong competition and potential regulatory challenges.