Relief Sweeps over Novo Nordisk Shareholders due to Significant Development
Novo Nordisk's (NVO 0.15%) success is primarily based on two significant products: Ozempic and Wegovy. Ozempic is a diabetes treatment, while Wegovy is its rapidly expanding weight-loss medication. Both have been linked to helping individuals lose substantial weight.
However, these glucagon-like peptide 1 (GLP-1) agonists carry potential risks. Some users have reported experiencing gastrointestinal issues due to GLP-1s. There have also been speculations about the use of these drugs potentially leading to more severe issues, such as suicidal thoughts. Yet, these concerns seem to be alleviated due to a recent study.
Studyuggests no heightened risk of suicidal thoughts due to GLP-1 use
The European Medicines Agency has been probing whether GLP-1 drugs like Wegovy and Ozempic might be related to suicidal thoughts. However, in April, they announced that there was no proof to support the notion of an increased risk resulting from the use of these drugs. This study effectively addresses one of the more prominent fears surrounding GLP-1 medications. It's crucial to mention that it did not examine all GLP-1 drugs; for instance, Eli Lilly's Zepbound and Mounjaro were not included in the study.
One of the major worries related to GLP-1s, with its popularity surging in recent years, is that all the side effects might not be fully understood, particularly in the long term. The tolerability and safety of the drugs can significantly impact their success compared to rival products. For Novo Nordisk, generating a substantial portion of its revenue from Ozempic and Wegovy, these recent findings offer a significant relief, as the study's results indicated no increased risk for patients regarding suicidal thoughts.
Novo Nordisk's sales skyrocketed due to Ozempic and Wegovy last year
To fully grasp the importance of these recent findings, one only needs to look at Novo Nordisk's financials for 2023. Ozempic generated revenue of 95.7 billion Danish krone ($14.4 billion), making it the company's leading product, accounting for 41% of its total sales of 232.3 billion Danish krone ($34.8 billion). Ozempic's sales increased by 60%, and its overall revenue grew by 31%.
Wegovy came in second, generating revenue of 31.3 billion Danish krone ($4.7 billion), having significantly outperformed its previous year's sales. Although Wegovy represents a smaller portion, 13% of revenue, than Ozempic, the gap may narrow as the company broadens the drug's availability and its popularity grows.
Ozempic is currently the leading product, but it received approval for diabetes treatment back in 2017, and many people have been using it off-label for weight loss in recent years. Wegovy, on the other hand, only obtained FDA approval for weight loss in 2021.
As the concerns about the side effects of these drugs subside, it can pave the way for further growth opportunities for these promising, rapidly growing products. Moreover, investors may be willing to pay a premium for Novo Nordisk's stock as this happens.
Novo Nordisk might be a top growth stock for the future
Over the past year, Novo Nordisk's share price has surged by more than 50%. The stock may seem expensive, with a price-to-earnings multiple of 47, which is hardly affordable. However, with plenty of growth potential still on the table and the company investing in more facilities and capacity, there's a strong reason to remain positive that Novo Nordisk's stock hasn't reached its peak, nor that it will any time soon.
Although it may not be as diversified as other healthcare companies, with some exceptionally popular and successful assets in Wegovy and Ozempic, Novo Nordisk could be a top growth stock to buy for the long term.
Despite the concerns about potential side effects, the recent study suggested no heightened risk of suicidal thoughts due to GLP-1 use, which is a significant relief for Novo Nordisk as Ozempic and Wegovy contribute significantly to its revenue. With Ozempic generating 41% of its total sales and Wegovy representing 13%, the company's financial success is heavily tied to these products.
Investors may be attracted to Novo Nordisk due to the growth potential of Ozempic and Wegovy, as the decrease in concerns about side effects could lead to increased demand for these finance-generating products.
