Danish company Novo Nordisk has been the talk of the pharmaceutical and medical communities, as well as People and E! this year, with everyone from Amy Schumer to Tesla CEO Elon Musk Celebrities and other celebrities are rushing to try the company’s diabetes and weight loss drugs Ozempic and Wegovy.
In the second half of this year, Novo Nordisk’s market capitalization overtook LVMH, the world-famous fashion giant known for Bulgari and Dior, rising to US$445 billion, making it the most valuable company in Europe.
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And, if you look at the numbers that Novo Nordisk has produced, it’s amazing.
According to data from Yahoo Finance, Novo Nordisk’s share price has risen by 45% year to date, while the S&P 500 Index has risen by about 19%. The Healthcare Index (XLV) fell nearly 3% during the same period. (Rival Eli Lilly, meanwhile, has seen its share price rise more than 60% year-to-date, but it also has other successful drugs.)
As of September 30, the company’s sales in the United States alone were up 45%. Wegovy and Ozempic generated sales of nearly $12 billion in the first nine months of this year, accounting for more than 50% of the $22 billion in total obesity and diabetes category revenue, according to company results.
How profitable is the company? This is a model of prudent commitment and mission-critical performance: Novo Nordisk has raised its guidance three times this year. The company initially expected earnings growth in 2023 to be between 13% and 19%, and now sets its target at 32% to 38%.
“Novo Nordisk … has essentially created a weight-loss drug market out of thin air that didn’t exist before and now has billions of dollars of potential,” said TD Cowen Securities analyst Michael Nedelcovych.
It’s no wonder investors fell in love with this company, and we named Novo Nordisk as Yahoo Finance’s 2023 U.S. Stock of the Year.
But as CEO Lars Jørgensen puts it, the company has “only scratched the surface” so far.
Jørgensen, who joined the company as an economist fresh out of university, said: “We had never launched a product that was widely known. So I think that created some challenges for the company, but also a lot of opportunities.”
How Novo Novo got started
Nordisk, the predecessor of Novo Nordisk, which just celebrated its 100th anniversary, was founded in the 1920s, when insulin was just discovered in the scientific community. Nordisk and Novo, which later merged with Novo, have been engaged in the business of this drug to help diabetics, accounting for 250% of its 2022 79% of US$100 million in sales. The company’s latest hot-selling product is a new drug called GLP-1, which signals the body to produce more insulin and slow digestion.
Novo Nordisk’s first weight loss product, Saxenda, was approved for sale in 2014, but attracted little attention on the market at the time because it could only reduce body fat by 8%.
Three years later, the type 2 diabetes treatment Ozempic hit the market, followed by Wegovy in 2021. Novo Nordisk has struggled to keep up with demand.
The past year has been a perfect storm of positive consequences for Novo Nordisk and the entire bariatric/diabetes pharmaceutical industry.
Drugs are becoming more and more popular, with stories emerging of celebrities like Sharon Osbourne and others taking Wegovy and Ozempic, as well as Eli Lilly and Company’s (LLY) Mounjaro.
Then came more and more rumors that CVS Health (CVS) and Walgreens (WBA) were out of stock and sending people with diabetes into panic. Semaglutide, the active ingredient in Ozempic and Wegovy, helps reduce the risk of heart attack, stroke or death from cardiovascular disease by 20% in overweight or obese heart disease patients, a study confirms, adding to the drug’s promise. The momentum added fuel to the fire.
The future of Novo Nordisk
Despite Novo Nordisk’s good fortune, it also faces challenges.
Although the company currently controls 54% of the GLP-1 market, other companies are still trying to enter the GLP-1 market or return after a hiatus of many years, according to Novo Nordisk’s latest results. According to the latest announcements, these include an oral drug from Pfizer (PFE) and Roche’s (RHBGY) return to the market through the acquisition of biotech company Carmot.
Another big problem is that insurance companies do not cover obesity treatment drugs. Ozempic and Wegovy are priced at $963 and $1,349 per month respectively. This made many people look at the door and sigh.
The company last month announced plans to spend a total of $6 billion to expand its production capacity in the country, not only to meet the boom in weight-loss drugs but also to ramp up production of other drugs to address other treatments for other diseases in its pipeline.
Novo Nordisk’s Century-old Store Becomes Fat Man’s Savior: Yahoo’s Annual U.S. Stock Market Profit (ASSOCIATED PRESS)
Novo Nordisk has been a major player in diabetes for years, but the drug’s efficacy in weight loss, as well as its positive effects on other conditions such as cardiovascular disease, could make the company’s portfolio more diverse and high-value , this is also the opportunity that investors are looking forward to finding.
Is Novo Nordisk’s story just beginning? Maybe, says Columbia University professor Meghan Fitzgerald. She and he are investors in Novo Nordisk. But there are too many unknown factors in the future to say this with certainty.
“There are currently more than 750 million obesity patients in the world, and the complications and social costs are huge. It will take several years to establish an appropriate medical and reimbursement model.”
2023-12-12 05:40:08
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