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A lot of work at the moment: Camilla Sylvest is responsible for Novo Nordisk's trading strategy
Photo: Carsten Snejbjerg / Bloomberg / Getty Images
Bagsvaerd, a suburb northeast of Copenhagen. 11,000 people live here. There is a church and three S-Bahn stations. Many single-family homes – Denmark flags fly in some front gardens. And there is the Novo Campus in Bagsvaerd, where the Danish pharmaceutical company Novo Nordisk is based. At the heart of the campus is the headquarters designed by Danish star architect Henning Larsen. A modern, circular building with a glass roof. Between the dreary-looking production and research facilities, the building seems almost out of place.
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Novo Corporate Headquarters: Sales explosion andSilicon Valley feeling in Denmark
Photo: PR
Ten years after the opening of the new company headquarters and 100 years after the founding of the group, the once grey pharmaceutical company Novo Nordisk is the most valuable group in Europe. At 424 billion US dollars, the market capitalization of the Danes not only exceeds the gross domestic product of Denmark, but at times also that of the French luxury giant LVMH. The secret of success? The Wegovy and Ozempic weight loss injections – which are used to treat diabetes and obesity – are causing the Group's sales and profits to explode.
"Within five weeks of its launch, Wegovy was prescribed at a level that would have taken other drugs four years to complete," Camilla Sylvest, 50, a member of Novo Nordisk's executive board and responsible for the group's trading strategy, told Bloomberg.
Analysts at Morgan Stanley predict that sales of weight loss injections will rise to $2030 billion by 77. The investment bankJefferies even expects an explosion in sales to more than 2031 billion dollars by 150, so big is the run in the western industrialized nations after the injection. Either way, we are talking about several hundred billion in the next decade.
Alzheimer's eggs, immunotherapies and anti-obesity remedies
Michael Nawrath, a pharmaceutical expert at Zurich-based financial services provider Octavian, believes that sales of this magnitude are realistic. "There are three major topics in the pharmaceutical industry right now: Alzheimer's drugs, immunotherapies for cancer and obesity drugs." According to Nawrath, the decisive factor for the commercial success of weight loss drugs is that they not only function as lifestyle products, but also have medically relevant benefits.
According to a study, Novo Nordisk's Wegovy weight loss syringe lowers the risk of strokes and heart attacks in obese people. In a clinical trial of approximately 17,600 adults over the age of 45 who are overweight or obese and have cardiovascular disease, the drug reduced the risk of a serious cardiovascular event by 20 percent.
It is not yet clear how exactly Wegovy leads to fewer heart attacks and strokes, says Nawrath. "It can only have to do with a direct effect on our vascular system." If the drugs really have a cardiovascular protective effect, then health insurance companies would have to rethink and cover the costs, Nawrath said.
Highly profitable business
While the monthly dose of the weight loss syringe in the USA is around 1200 euros, patients in Germany pay just under 330 euros. The companies hope that the health insurance companies will soon cover the costs. So far, the drug is only available on prescription, but patients bear the costs.
A look at the figures shows that the business is already more than worthwhile for Novo Nordisk: In the first half of the year, the Danes' sales in the so-called obesity business jumped by 158 percent. Thanks to Wegovy, sales of the Group as a whole rose by almost 30 percent to almost 15 billion euros within a year. And the business is highly profitable: operating profit also climbed by 30 percent to 6.6 billion euros.
In terms of sales, Novo Nordisk still plays in the lower midfield of the pharmaceutical industry. In the case of weight loss medicines, however, they dominate the market. In addition to Wegovy, Novo has another appetite suppressant, Saxenda, and Ozempic and Victoza, two drugs that are approved as diabetes 2 drugs, but are also used as weight loss agents.
Attack from the U.S.
The competition wants to break the market dominance of the Danes. First and foremost Eli Lilly, the most valuable pharmaceutical company in the world with a market capitalization of almost 529 billion US dollars. With the diabetes drug Mounjaro, the U.S. company has a drug that has already been approved for the treatment of diabetes in the U.S. and Europe. Approval as an obesity drug is imminent. According to some studies, Mounjaro is supposedly even more effective than Wegovy. Within 18 months, the remedy is said to lead to an average weight loss of 21 percent. Patients who inject Wegovy lose an average of 15 percent of their body weight.
"Eli Lilly doesn't come close to Google or Apple, but it's the first pharmaceutical company to reach a market capitalization of $500 million – and was piggybacked by Novo Nordisk for the last price jump," says Nawrath. Because Novo Nordisk had shown the cardiovascular effect, not Eli Lilly. However, it is very likely that the U.S. company's product candidates will also lead to a reduction in heart attacks and strokes, Nawrath said. Corresponding studies are already underway.
Novo and Eli Lilly's research lead – the development hurdles are high
The pharmaceutical analyst assumes that the two companies will divide the billion-dollar market among themselves. "Novo Nordisk and Eli Lilly have a huge head start in research, and the development hurdles are too high for other companies to simply pass by," says Nawrath. "Other pharmaceutical companies can't even develop a GLP-1 analogue or even more effective successors with dual or triple-acting mechanisms."
Pursuers: Pfizer and Amgen
The so-called GLP-1 agonists were originally developed for the treatment of type 2 diabetes, but are also shown to be effective means of weight regulation. The preparation Wegovy contains the active ingredient semaglutide. Semaglutide mimics the effect of the body's own hormone GLP-1 and promotes the release of the hormone insulin in the body. In this way, the substance increases the feeling of satiety and helps to regulate blood sugar levels.
Pharmaceutical expert Nawrath sees the other competitors Pfizer and Amgen still involved in the segment. Pfizer is currentlytesting the twice-daily active ingredient danuglipron in a Phase 2 study. Most recently, Danuglipron showed similar results in weight loss to Semaglutide from Novo Nordisk. A once-daily weight loss pill has stopped Pfizer because of elevated liver values concerns about the effects on the liver.
The obesity drug AMG133 from the US biotechnology company Amgen also showed promising trends towards sustainable weight loss in an early clinical trial at the end of 2022. After twelve weeks of treatment with the highest monthly dose, the remedy resulted in an average weight loss of 14.5 percent.
Novo Nordisk and Eli Lilly with acquisitions
However, Nawrath does not see up to ten competing obesity drugs coming onto the market in the next few years, as experts predict. On the contrary, "Novo Nordisk and Eli Lilly are already buying smaller biotech companies and thus expanding their market position". The fact that only a handful of pharmaceutical companies will participate in the lucrative business is due to the fact that the other competitors did not recognize this trend in time, according to the pharmaceutical expert's assessment. "Once strategic decisions have been made, they have been made that can no longer be corrected quickly."
At Novo Nordisk, the biggest cause for concern at the moment is likely to be its own production anyway. Demand already exceeds the Danish group's production capacity. "We had expected high demand, but not such a high one," says Sylvest. So far, Wegovy has been bottled by the contract manufacturer Catalent. In the future, the U.S. company Thermo Fisher will help to satisfy demand.