A box of Ozempic, a semaglutide injection drug used for treating type 2 diabetes and made by Novo Nordisk, is seen at a Rock Canyon Pharmacy in Provo, Utah, U.S. March 29, 2023. REUTERS/George Frey REFILEweighty valuation could be headed for a crash diet. On Thursday, the maker of diabetes and obesity remedies was worth over $270 billion, twice its value only two years ago.
Novo CEO Lars Fruergaard Jorgensen has a way to claim his stock isn’t overpriced. By 2031, Jefferies reckons the obesity drug market could generate $100 billion of sales, with Novo and its $409 billion U.S. rival Eli Lilly expected to dominate via 40% shares apiece. On top of Novo’s potential Alzheimer’s medication and existing diabetes treatments, that would mean the Danish company’s obesity arm could contribute $40 billion of 2031 revenue alone.
All that sounds great. But sceptical investors may be wondering what would need to happen for the rosy picture to not pan out. Obesity sales for Novo are still only expected to reach $12 billion by 2027, according to estimates from Visible Alpha. It looks hard to guarantee they will more than treble in the four years after that.
Based on potential alone, Novo’s premium can be justified. But given how important Wegovy is to its recent valuation bump and long-term growth story, it’s equally possible to imagine that the Danish group’s valuation experiences the sort of weight loss its obesity drug can only dream of.Danish drug developer Novo Nordisk on May 4 reported 53.4 billion Danish crowns of sales in the three months ending March 31, a 25% increase.
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