By Emil Bjerg, journalist and editor
Thanks to soaring demand for diabetes and obesity drugs Wegovy and Ozempic, Danish drug maker Novo Nordisk is now the biggest company in Europe. In this profile, we cover its challenges and future potential.
In 2023, Jimmy Kimmel opened the Oscars with a reference to Novo Nordisk: “Everybody looks so great. When I look around this room, I can’t help but wonder ‘Is Ozempic right for me?’”
With the commercial introduction of Ozempic and Wegovy, Novo Nordisk has become a reference point in pop culture – while also becoming a global economic power player.
Last year, Novo Nordisk became the biggest European company, surpassing luxury brand LVMH. How did a Danish diabetes drug company achieve that growth and what future challenges and growth potential lies ahead? In this pro le, we cover it all.
Wegovy and Ozempic tap into a massive global market
The origins of Novo Nordisk dates back to 1923, following a trip to Canada by Danish scientist August Krogh and his wife, doctor Marie Krogh, in which they secured permits to produce insulin in Denmark. The pair had a personal investment in getting the permit: Marie Krogh was a diabetic herself, and before the introduction of insulin, diabetes was a deathly disease. In recent years, Novo Nordisk has expanded outside diabetes medications, launching treatments for weight loss and heart diseases.
Novo Nordisk owes its recent success to the medications Ozempic and Wegovy. Ozempic is prescribed to patients seeking to lose weight, while Wegovy is used for diabetes management. The active ingredient in both medications is ‘semaglutide’, a component discovered by Novo Nordisk scientists. Semaglutide mimics a naturally occurring hormone in the body called GLP-1, that helps regulating blood sugar levels by stimulating insulin production, slowing down digestion, and reducing appetite.
In contrast to previous weight loss medications, which have proved largely ine cient, Ozempic actually works. And that opens a massive global market: There are more than one billion obese people in the world, a number still on the rise. “This is going to be one of the biggest, one of the highest demand drugs in the history of pharmaceuticals,” health care specialist Jared Holz recently told CNBC. In the rst six months of 2023, the sales of Ozempic rose by 58%, while that number is a staggering 363% for Wegovy.
Clinical trials a ecting stock prices
As a pharmaceutical company, clinical trials play a massive role in the success of Novo Nordisk. In 2023, a late-stage clinical trial showed that Wegovy reduced the risk of major adverse cardiovascular events by 20% compared to a placebo. The Novo Nordisk stock climbed by 17% that day.
Similarly, in March 2024, Novo Nordisk’s stock surged dramatically after their announcement of positive trial results for their oral new weight-loss drug, amycretin. While clinical trials have mostly had a positive e ect on the perceived value of Novo Nordisk, this also adds an element of volatility to the stock.
Risks, challenges, and critiques
Novo Nordisk is in intense competition with fellow diabetes and weight loss medication company Eli Lilly. Like Novo Nordisk has Ozempic and Wegovy, Eli Lilly has Mounjaro and Trulicity.
Eli Lilly’s active component tirzepatide has proven to be even more e ective than Novo Nordisk’s semaglutide for weight loss. In the US, the FDA recently approved it as a weight loss medication under the name Zepbound. But Novo Nordisk CEO Lars Fruergaard Jørgensen takes the competition with a stoic calmness: “I like competition because if there’s no competition, there’s a risk that we don’t stay innovative. So we have been competing with Eli Lilly for 100 years,” he says. Their competition in this lucrative space is said to push both companies research and development efforts with Eli Lilly spending 25% of their budget on R&D.
In China, the country in the world with the highest number of obese people, Novo Nordisk is bracing for heightened competition as its patent on semaglutide is set to expire in 2026. Similarly, in 2032 Novo Nordisk’s US patent on semaglutide will expire. With patents disappearing on two of their most lucrative markets, it will be a fundamental challenge for Novo Nordisk to innovate beyond semaglutide.
Also in the US, Novo Nordisk faces criticism for pricing their diabetes medicines at too high a price point. A month of Ozempic costs $969 a month in the US, but just $155 in Canada and $59 a
month in Germany. Novo Nordisk blames the American health care system, arguing, that they only retain around 60% of the sales price of Ozempic and Wegovy after rebates and fees to middlemen. Lars Jørgensen, Novo Nordisk CEO, has recently agreed to testify voluntarily in a US Senate hearing focusing on the company’s US prices.
And then there are the side e ects. While semaglutide is generally considered much safer than earlier weight loss drugs, GLP-1s like semaglutides and Eli Lilly’s tirzepatide have been linked to side e ects like mild nausea and more serious adverse e ects like stomach paralysis, depression, and suicidal thoughts. While the risk of side e ects is low, they do represent a future risk for Novo Nordisk and Eli Lilly as well.
One of the biggest challenges according to Novo Nordisk itself? Keeping up with the high global demand. “To be able to support all the of the patients who are diagnosed or would be diagnosed as obese in the US market, you’d have to be able to supply over 50 billion pens,” healthcare stock analyst Seamus Fernandez says. And that’s in the US market alone. According to Novo Nordisk, in 2023 the company invested more than $10 billion in new production facilities, while also operating existing facilities 24/7.
Prospects and potentials
While Novo Nordisk faces several challenges, in the last five years, Novo Nordisk’s stock has grown more than fivefold, sparking a natural interest in what lies ahead for the company.
Market analysts are generally in consensus about the future growth prospects of Novo Nordisk. Among 26 Financial Times analysts, on June 13, 2024, five experts recommended to buy the stock, 13 experts believed that Novo Nordisk’s stock would outperform competition, while nine recommended to hold the stock. Two recommended to sell, and none believed the stock will underperform. The same analysts predicted a 22.03% increase in dividends in the upcoming fiscal year compared to last years dividends.
Ozempic has already become normalized in Hollywood and beyond as a medication for meeting beauty standards. Next up could be the average consumer, experts predict: “After treatments become available for those who need it the most, the next step is likely reaching the average consumer. That is people who want to lose a little extra weight,” healthcare stock analyst Seamus Fernandez says. While consumer products don’t command the same pro t margins that pharmaceutical products do, they can be scaled to a much bigger market, which could become a serious driver for future growth.
At the same time, the market for overweight medications is guaranteed to grow: 1.2 billion people are predicted to be obese by 2030.
But with rising competition and expiring patents, Novo Nordisk will have to innovate outside semaglutide to stay on its successful trajectory. Currently, the drug CagriSema looks like a candidate to compete with Eli Lilly’s Zepbound. CagriSema, a combination formulation of semaglutide and the component cagrilintide, is currently in phase three testing for type 2 diabetes and obesity and initial results look promising. Novo Nordisk is also continuing its research in medications for heart diseases while branching out into drug research for kidney diseases.
Novo Nordisk is actively expanding in rapidly growing markets like Asia-Paci c, Latin America, and Africa, where diabetes and obesity rates are rising. These regions are experiencing signi cant increases in the prevalence of diabetes and obesity due to changing lifestyles, urbanization, and dietary habits.
Finally, Novo Nordisk also expands into technological solutions to enhance patient care and treatment outcomes. The company has developed digital health platforms and mobile applications tailored to support diabetes and obesity management. Novo Nordisk work with three categories: optimize, augment and explore. With optimize, the company looks into how they “can use data, automation, and robotics to enhance our processes”. Augment means to Novo Nordisk to improve “outcomes for patients using treatments and tools that incorporate drugs, diagnostics, devices, digital, and data”. Explore “is about leveraging digital to create value for our patients independent of the drug, as well as partnering with start-ups and institutions to invest in and scale in the area of holistic care.”
And so, with heavy competition, Novo Nordisk continues to innovate from drug discoveries to product optimization.
