It’s a good bet that, five years ago, the average American investor would not have been familiar with Novo Nordisk (NYSE: NVO). That’s because the Denmark-based company had not yet won U.S. Food and Drug Administration (FDA) approval for its star drug, weight loss treatment Wegovy.
What a difference five years and several regulatory nods can make. Novo Nordisk has rocketed to prominence on the back of Wegovy, and its stock has soared accordingly.
If you had slapped $1,000 down on Novo Nordisk on May 10, 2019, your investment would have grown more than five-fold to $5,320.
Novo Nordisk is Exhibit A of the philosophy of focusing on core competencies. More than a century ago, the pharmaceutical company’s most direct antecedent entered the insulin business. Ever since then, its main therapeutic area has been diabetes.
Wegovy is part of that tradition. Both it and the related medication Ozempic — developed and approved as a diabetes drug — contain the same active ingredient, semaglutide, but have different dosages.
The company earned its first, crucial FDA nod for Wegovy in 2021, and it’s never looked back. For years the drug has been a star as a weight loss treatment, particularly in the U.S. where a great many people struggle with obesity. This is a massive market eager for a product that can take the pounds away.
The numbers tell the tale. In Novo Nordisk’s first quarter of 2024, Wegovy’s sales doubled and then some to nearly 9.4 billion kronor ($1.4 billion).
With that kind of success, rivals are pushing hard to get their own obesity drugs to market. One that’s received an FDA nod recently is Eli Lilly‘s Zepbound, and others are sure to get green lights before long.
That’s certainly a threat, but early mover advantage absolutely counts in this business. Besides, Novo Nordisk is busy developing semaglutide for other potential therapeutic uses. We can easily imagine semaglutide expanding into other indications. This remains a business with quite a future, and on that basis, all investors should consider owning it.
Before you buy stock in Novo Nordisk, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Novo Nordisk wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $553,880!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of May 13, 2024
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
—
Blog powered by G6
Disclaimer! A guest author has made this post. G6 has not checked the post. its content and attachments and under no circumstances will G6 be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the G6 has been advised of the possibility of such damages in advance.
For any inquiries, please contact [email protected]
