Novo Nordisk stock: The company behind Ozempic and Wegoby is now bigger than Tesla

London
CNN
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First, Novo Nordisk, the company behind Ozempic and Wegoby, has grown beyond its native Denmark. Now it’s bigger than Tesla.

The pharmaceutical giant’s shares soared more than 8% on Thursday, increasing its market capitalization to $609 billion, about $40 billion more than Tesla’s valuation.

Investors flooded into Novo Nordisk’s stock after the company reported early results from a trial of amicletin, an experimental weight loss drug that can be taken in pill form. According to data from the phase I trial, a participant’s weight decreased by 13.1% after his 12 weeks.

Grégoire Viola, a senior investment manager at Pictet Asset Management who focuses on companies that help improve people’s health, called the results “very strong” and said Novo Nordisk (NVO) lost weight. He said there is a possibility of monopolizing another corner of the drug industry. market.

“Some doctors say that some patients can’t give injections and would rather take oral medication,” he told CNN.

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Novo Nordisk was once a little-known maker of the diabetes drug Ozempic, but its value has ballooned as its off-label use for weight loss has expanded. Wigovy, which contains the same active ingredient as Ozempic, was approved by the U.S. Food and Drug Administration in 2021 to treat obesity.

The company’s market capitalization is now larger than Denmark’s annual economic output of $410 billion, and its success was largely responsible for helping the country avoid recession last year. According to Statistics Denmark, the economy grew by 1.8% in 2023, but would have contracted by 0.1% without the rapid growth of the pharmaceutical industry.

According to Jens Nervig Pedersen, a senior analyst at Danske Bank, last year Novo Nordisk “was the difference between whether the Danish economy grew or not” and this year Novo Nordisk remained “the main driver of growth”. ” is likely to occur.

“There are some very successful companies that have boosted the economy,” he told CNN. “It’s creating jobs, creating investment in new factories and jobs in the construction sector.”

The frenzy surrounding weight-loss drugs reflects some of the revolutionary rhetoric around electric cars, with the potential to boost the economy by improving people’s health and upending the business models of food companies and traditional weight-loss companies. ing.

But the industry is struggling as EV demand growth shows signs of slowing. In the U.S., high prices, a lack of public charging infrastructure and a confusing patchwork of tax credits are deterring some potential buyers.

Tesla (TSLA), led by EV giant Elon Musk, is in turmoil. The company sold a record number of cars in the last three months of 2023, during which it lost its position as the world’s largest EV maker to China’s BYD. Faced with increased competition, Tesla cut prices on some models last year.

The company’s stock price has fallen 28% since the beginning of the year, in part due to an arson attack on a transmission tower near its factory near Berlin, Germany, this week. The attack cut off power to Tesla’s only factory in Europe, halting production, but power is not expected to be restored until March 17, Reuters reported.

In contrast, Novo Nordisk’s shares are up 30% this year and nearly 80% over the past 12 months. Eli Lilly (LLY), a US drug company active in the same field, has made similar profits this year.

The companies have cornered the global market for weight-loss drugs that mimic GLP-1, a natural hormone that suppresses appetite. They have struggled to keep up with the surge in demand for such drugs and are pouring billions of dollars into expanding manufacturing capacity.

“Novo and Lilly are in the luxury position of not being able to supply the market because there is so much demand for their medicines, and next year will be no different,” Pictet’s Violas said.

The market for these drugs is likely to grow as the number of people defined as overweight or obese is expected to increase globally.

Tesla’s outlook is much more uncertain given Chinese competition and an apparent slowdown in EV adoption in the U.S. and Europe.

It’s been a rough start to the year for Musk, who was dethroned as the world’s richest person by Amazon founder Jeff Bezos earlier this week. According to the Bloomberg Billionaires Index, Mr. Musk has a net worth of $198 billion and Mr. Bezos has a net worth of $200 billion.