The reason behind Novo Nordisk’s success
Danish pharmaceutical company Novo Nordisk has reached a more than USD 500 billion valuation. This makes it the second company in the European Union to achieve this level of market capitalisation. It has even overtaken the LVMH group.
The pharmaceutical company owes its success to the worldwide popularity of two anti-obesity drugs:
– Wegovy – an anti-obesity drug;
– Ozempic – a weight loss drug for diabetics.
The drugs share the same active ingredient, which is why they have caused such a stir around the world.
Good sales figures have allowed analysts to make optimistic forecasts for 2024. Experts expect the company’s sales to grow by 26% and its operating profit by 29%.
The effectiveness of the obesity drugs Wegovy and Ozempic contributed to the record increase in demand. Unprepared for the hype, Nordisk is now actively ramping up production. For example, the company says it has more than doubled deliveries of Wegovy to the US. This will enable it to meet the demand for the drug from patients there.
However, experts are in no hurry to make long-term forecasts for Novo Nordisk. The company’s sales depend on two things:
– how the drug Zepbound, which Eli Lilly introduced in 2023, will perform;
– the length of time that people are on the drug for weight loss.
In addition, Wegovy has some properties that may affect its popularity. Adverse side effects include vomiting and diarrhoea. The cost of one month’s treatment is USD 1,349. These factors could lead to a rapid decline in the hype surrounding the drug. According to Bloomberg, the company’s shares could lose around 3% of their value over the next 12 months.
Novo Nordisk business overview
Novo Nordisk has been in business since 1923 as an insulin manufacturer. Despite its broad product range, the company focuses on diabetes medicines. It also produces hormone replacement therapy and growth hormones. The company has manufacturing facilities in nine countries and sells its products in 168 countries.
Novo Nordisk is the market leader in Denmark and the most valuable pharmaceutical company in the European Union. In 2023, its market capitalisation exceeded the GDP of its home country.
The effectiveness of Wegovy and Ozempic in treating obesity became known to a wide range of patients in 2022. Sales of these drugs soared to record levels and significantly contributed to the Danish economy. Around 60% of the country’s GDP came from the pharmaceutical sector. In the first six months of 2023, Novo Nordisk’s profits grew by 45%, reaching the USD 3.2 billion mark in the fourth quarter.
