Ozempic and Wegovy. Two names of medicines practically unknown to the general public – doctors, patients and a handful of seasoned financiers who follow the sector on the sidelines – are the protagonists of a 180-degree turn in the direction of a company (Novo Nordisk) and the economic support of a country (Denmark) just when the economic clouds lurk again in a Europe in which the rise in rates begins to make a dent. The Copenhagen-based pharmaceutical company is, for a couple of weeks, the most valuable company in Europe, after surpassing the French luxury giant LVMH and sneaking into the 20 largest companies in the world. The Nordic country, for its part, has just dodged the recession on the horn thanks, to a large extent, to these two anti-obesity drugs made in Denmark.
To understand the rise to the skies of this once modest pharmaceutical laboratory specializing in diabetes, which today has almost 60,000 employees worldwide, you have to look back almost seven years. It's January 2017. Novo Nordisk is already the most valuable company in Denmark – one of the most prosperous nations in the European Union – but it is going through a stock market and business interregnum. The action is stagnant, fertilized to lateral movement. There are, in short, few reasons that invite us to venture what is about to come: a rally more typical of a chicharro (value of little liquidity and capitalization, which delights speculators for its great volatility) than of a world transatlantic.
The landing at the top of Lars Fruergaard Jørgensen, a house executive with little risk aversion, changes everything. In full internal debate about the convenience of continuing or not with the very expensive trials to verify the effectiveness of Wegovy against heart problems associated with obesity, the new CEO tips the balance. More than five years later, time proves him right. The results, which saw the light last summer, are more than positive: the drug reduces the probability of heart attacks by 20%, even above what is expected by the market. The action soars, and the rest of the story is already known.
Novo Nordisk has hit the target twice. With Wegovy, which is now taking its first steps, and with Ozempic, which despite not yet being officially prescribed against obesity already has a legion of users after several Hollywood stars put it in orbit. Its price in Spain: 130 euros for a month of treatment.
This double success could not have come at a more propitious time from the point of view of health needs. It does so just when this chronic pathology begins to acquire tinges of epidemic – in the words of the World Health Organization (WHO) – in the West. The United States, where just over two in five adults suffer from it, is the epicenter. But Europe is lagging behind: in the Old Continent it is already among the main causes of death and disability.
By 2023, the company's revenue from Wegovy and Ozempic will more than double on an annual basis. But those who follow the day to day of the company are already betting on much higher levels, of the order of 16,000 million in 2027. Patents still have some way to go: in most markets they will not expire until well into the thirties. "We are only at the beginning," predict Emily Field and Charles Pitman, of the British bank Barclays, which has just raised its forecasts for Novo Nordisk from 2024. "Obesity has become a secular and unique opportunity for the entire pharmaceutical sector and, specifically, for Novo," analysts at Germany's Deutsche Bank completed in a report published just after the Danish company overtook the iconic French group that owns Louis Vuitton, Christian Dior or Moët Hennessy on the stock market. The architect of the antidote to overweight against the global icon of opulence, two of the concepts that can summarize this era.
Markets, the old adage goes, price expectations and not profits. Without being, far from it, the pharmaceutical company that earns the most money in the world, the Danish company is already the second largest listed company in the sector by stock market value: they are already almost 400,000 million euros. Ahead in the ranking still has Eli Lilly, an American colossus and its main competitor in the treatment of obesity with its compound Mounjaro, which already exceeds half a trillion euros of market capitalization after doubling the value of its shares in just half a year and quintupling it since confinement. Eli Lilly is the tenth most valuable firm in the world, one step away from Meta (owner of Facebook) and ahead of Visa. Novo Nordisk, meanwhile, has increased its value sixfold in the last decade, tripling it since the pandemic and scoring a growth spurt of almost 75% in the last year.
The potential market for anti-obesity drugs is simply huge. Barclays has recently valued it at about 100,000 million dollars (94,000 million euros at the current exchange rate) in the next decade, with a kind of premium to who jumped first into the pool and risked his money in an uncertain project for drugs that increase the feeling of satiety in patients. "Market share should be shared, relatively equally, between Novo Nordisk and Eli Lilly," analyst Axelle Pinon, a member of the investment committee at French asset manager Carmignac, recently projected. The rest of the competitors, however, are not idle: Pfizer, boosted to stardom by its success with the vaccine against covid-19, also wants to join the race.
The market is there, and the challenge is, rather, how to meet demand. The boom has pushed its factories to the limit, and the Danish company is already considering the opening of a new plant specific to its anti-obesity compound after announcing an investment of 2,000 million to resize its facilities. "Novo Nordisk is facing significant supply problems in international markets that, if not resolved, could lead to a loss of share," Zacks analysts warn in a study published this week. That is the flip side of an unprecedented pharmacological and business triumph. The ever-present risk of becoming entangled with your own success.
A century-old company
Novo Nordisk celebrates its centenary this year. Its origin is in diabetes. In 1921, the Danish Nobel laureate August Krogh and his wife Marie, who suffered from this disease, learned of the discovery of insulin. August, aware of his wife's health problems, traveled to Canada and obtained permission to produce the drug in Denmark. In 1923, the first patients in the Nordic country were treated with insulin.
A century later, Novo Nordisk is a global giant. Its sales in 2022 grew by 26% and stood at 23,720 million euros, while operating profit climbed 16% and exceeded 10,000 million. It is a very profitable company, since its operating margin stands at 42.3%. In addition, it distributes (pay out) 50% of its profits in the form of dividends.
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