Novo’s prospects beyond weight-loss drugs look surprisingly lean
Despite plans to broaden its business beyond obesity treatments, the Danish group’s guidance is unambitious
Three years ago, Novo Nordisk — yet to rebrand as Novo — was Europe’s most valuable company by market capitalisation. Today, it is not even in the continent’s top 10, having lost its dominance of the fast-growing market for weight-loss drugs known as GLP-1s. The Danish drugmaker, its share price shrunken by three-quarters since its 2024 peak, is now trying to convince investors that there is more to life than Ozempic and Wegovy.
It’s not clear they agree. Novo’s shares fell by about 8 per cent on Monday as it laid out its strategy. This involves expanding its capacity in weight-loss pills — the sequel to its pioneering injectables — and building the next generation of drugs in obesity and diabetes, while broadening the business into related conditions like blood and endocrine disorders and liver diseases. It aims to have at least five multi-blockbuster drugs, meaning those with several billions of dollars in annual revenue, by 2030.
For all the new launches Novo’s management presented, its guidance seems a little unambitious. In oral Wegovy alone, it plans to build enough capacity to serve roughly 10 times as many patients as the current 1.5mn. But serving about 15mn patients isn’t much, since the arrival of highly effective pills is expected to make treatment accessible to a vastly larger population. Novo thinks there are potentially as many as 2bn people living with obesity worldwide.
In any case, weight-loss drugs are unlikely to get Novo back to its peak form, when the company was worth roughly $600bn. The economics of the obesity market have changed considerably. Rivalry between Novo and Eli Lilly has triggered a race to the bottom on price, and the pharma market is rife with competitors looking to nose in with their own pills and next-generation treatments.
Moving more towards the kinds of diseases for which obesity is a gateway makes sense. But even here, Novo seems cautious. Its goal of growth of 50 per cent in its blood and endocrine disorder division by 2030 is roughly in line with its current growth rate, according to analysts at ABG Sundal Collier. Overall, Novo expects the plan to deliver growth in line with a peer group, implying around 5 per cent a year until 2030.
Back when Novo was riding high on GLP-1 excitement, it would have seemed unlikely that it would revert so quickly to being a steady, mature company. The message so far is that while there is life beyond Wegovy, it’s much less exhilarating than investors hoped.