About the company

Novo Nordisk is a Danish pharmaceutical company that specialises in the development and manufacture of medicines for the treatment of diabetes, obesity and other chronic diseases. The company has a history of more than 90 years, is one of the world's leading manufacturers of insulin and its products are sold in more than 170 countries. It is known for its innovative approaches to diabetes treatment, including insulin pens and advanced drug delivery technologies. In recent years, Novo Nordisk has also had a strong focus on obesity treatment, with its drugs Wegovy and Ozempic gaining huge popularity worldwide. Novo Nordisk is committed to research and development, employs thousands of people worldwide and is constantly working to improve the quality of life of patients through its medicines and services.

Expanding production capacity to meet demand

Novo Nordisk has announced the construction of a new US factory in Clayton, North Carolina, to fill injection pens used for drug delivery. The total investment in construction is expected to be 4.1 billion USD. Its completion between 2027 and 2029 will create an additional 1,000 jobs, on top of the current 2,500, as Novo Nordisk already has a manufacturing facility in the region. The sharp rise in popularity of Wegovy and Ozempic, which are primarily designed to combat obesity and diabetes, has caused supply shortages and restrictions for patients. The manufacturer has made expanding production capacity one of its priorities after rival Eli Lilly launched its own weight-loss drug in December. Both companies are struggling to meet demand for the products.[1]

Weight loss drug also approved in China

With obesity being a modern-day problem for mankind, Wegovy's drug to help with weight loss has brought Novo Nordisk to the limelight since its launch in 2021. Now its use has also been approved in China, the world's second largest economy. But initially, patients there will have to pay for the drug themselves. The company has not yet said exactly when sales will start, what the price of the drug will be and how much it plans to ship to that country. Novo Nordisk needs to use its market advantage quickly because the patent licence for the key ingredient semaglutide, which is also in Ozempic, expires in China in less than two years. Manufacturers there are already working on their own versions. Unlike in China, the patent in Europe and Japan does not expire until 2031 and in the US in 2032. According to the study, the number of overweight adults in China will rise to 540 million by 2030, nearly triple the number at the start of the millennium. The drug Ozempic won approval in China in 2021, and revenue from its sales in the Greater China region reached 698 million USD last year.[2]

Economic results

Novo Nordisk's earnings results for the first quarter of 2024 were released at the end of March. The drugmaker reported sales of 65.3 billion DKK (9.47 billion USD) in the period, with a 22% year-on-year increase. The company's net profit reached 25.4 billion DKK (3.69 billion USD), up 28% on the comparable period in 2023. These figures are the result of strong demand for diabetes and obesity drugs, sales of which accounted for a significant share of sales. Sales of Wegova in the United States, where it has also received approval for use against cardiovascular disease, was one of the main factors supporting sales growth. In addition, the successful completion of the FLOW study with semaglutide and other positive news on the approval of new drugs such as Awiqli for the EU also contributed to positive sentiment and growth expectations.

Share price development

Novo Nordisk has seen consistent growth in its financial indicators. Even last year it became the most valuable company in Europe, overtaking French giant LVMH in market capitalisation. During June 2024, the company's share price reached new all-time highs, and its market capitalization now stands at approximately 634 billion USD.[3][4] * Investment bank Deutsche Bank continues to maintain a target of 1,100 DKK (160 USD) per share for Novo Nordisk's stocks. It made the decision after speaking with Research Director Martin Lange, who provided information on the latest programs aimed at researching new drugs.

Novo Nordisk's share price development over the last 5 years. (Source: Google Finance)*

Outlook for the period ahead

Guidance for the rest of 2024 shows that Novo Nordisk expects continued strong revenue growth in the range of 19 % to 27 %, while operating profit growth is expected to be in the range of 22 % to 30 %. These prospects are underpinned by the assumption of continued demand for the manufacturer's innovative medicines and its activities in the development of new medicines aimed at improving the treatment of diabetes, obesity and other diseases.[1] [1]

Conclusion

Pharmaceutical companies often struggle with problems such as high operating costs due to extensive research and testing of their drugs, resulting in long-term profitability. Novo Nordisk does not have such problems yet due to the commercial success of its drugs. It has experienced gradual growth over the last few years and, based on ongoing research and testing, this positive trend looks set to continue in the near future.

Adam Austera, Principal Analyst at Ozios

* Past performance is no guarantee of future results

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which may change. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.

[1]https://www.novonordisk.com/content/nncorp/global/en/news-and-media/news-and-ir-materials/news-details.html?id=168508

[1] https://www.investing.com/news/stock-market-news/wegovymaker-novo-nordisk-to-spend-41-billion-to-boost-us-manufacturing-3494316

[2] https://www.investing.com/news/economy-news/novo-nordisk-says-its-wegovy-weightloss-drug-wins-china-approval-3495042

[3] https://www.google.com/finance/quote/NVO:NYSE

[4] https://companiesmarketcap.com/novo-nordisk/marketcap/