Diet without effort, that’s what many people expect from the Wegovy weight loss injection. The drug from the pharmaceutical company Novo Nordisk is currently experiencing a boom because it is said to help you lose weight quickly. Anyone who looks at the stock market prices of European companies might think that the Danish manufacturer secretly gave the luxury goods company LVMH such an injection. While the market capitalization of the previous leader has been falling since the beginning of September, Novo Nordisk now leads the ranking of Europe’s most valuable companies with a market value of over 400 billion euros.
Novo Nordisk has dominated the market for insulin products for a long time. Wegovy has taken the group’s shares to a new level. On Thursday, the pharmaceutical company’s market value was 401 billion euros. For comparison: Denmark’s gross domestic product in 2022 is 376 billion euros. In the last six months alone, Novo Nordisk generated sales of 14.45 billion euros – an increase of 30 percent compared to the first half of the previous year. In two years, 10,000 employees have been added and around 59,000 people now work at Novo Nordisk.
Market capitalization has tripled since 2020
There is no miracle cure behind the weight loss injection that melts the fat cells when injected. Instead, the active ingredient semaglutide ensures a longer-lasting feeling of satiety. Anyone who injects it once a week should lose the pounds. A study funded by Novo Nordisk found a 15 percent weight loss after 68 weeks compared to the comparison group. Losing weight without much effort sounds tempting. It’s not surprising that the company that could solve this with the pressure of syringes is booming.
Almost a hundred years ago, Nordisk Laboratorium entered the insulin business. Today, the merged Novo Nordisk A/S leads the associated global market. After the American Food and Drug Administration approved Wegovy in June 2021, the share price and therefore the market capitalization rose sharply. The EU approval and advertising by celebrities such as Elon Musk and Kim Kardashian last March also drove the hype. A study in early August triggered another jump. According to her, the drug can reduce the risk of “serious cardiovascular events” – such as heart attacks – by 20 percent. Overall, Novo Nordisk’s market value has almost tripled since 2020.
Wegovy is currently approved and available in Germany, Norway, Denmark and the USA. Or better yet, it would be available. The company’s production is lagging behind demand. When asked, it would not reveal how much can be produced. However, this year alone, 25 billion Danish crowns (3.35 billion euros) will be invested in expanding capacities, a spokesman said. In Germany, the drug is initially only intended for people with a body mass index of 30 or over or 27 in cases of a weight-related comorbidity. But the weight loss injection also costs money. The highest dose costs just under 75 euros. Anyone who uses it for 68 weeks – as in the study – would then have to pay more than 5,000 euros.
Danish economy grows because of Novo Nordisk
The company’s success is also reflected in the Danish economy. “Without Novo Nordisk, the economy would have contracted slightly in the last six months,” says economic expert Birthe Larsen, professor at the Copenhagen Business School. Slight growth is also forecast for 2023 due to Novo Nordisk; previously a slight decline was expected.
In principle, according to Larsen, the Danish economy is doing well. The success of Novo Nordisk gives the state more financial leeway. However, Larsen warns: “Inflation is still a big problem, so the state should not spend too much”. Denmark benefits, but there could be a problem should Novo Nordisk move to another country. Larsen considers this scenario to be rather unlikely. How the competition behaves will also be decisive. Should Novo Nordisk lose its position in the pharmaceutical market, “this in turn would have consequences for the Danish economy”.
One such competitor is the US company Eli Lilly. The company now wants to use its drug “Mounjaro”, which is used to treat diabetes, as a remedy against obesity. The company has already applied for approval for this. Despite the financially strong competitor, whose market value exceeds that of Novo Nordisk, there is no reason for the Danes to worry for the time being. On the one hand, because the demand for Wegovy is enormous, and on the other hand, because it will continue to increase as the number of obese people is increasing. It remains to be seen whether drugs like Wegovy will be used by the general public for the beach body in the future. According to experts, not much is currently known about the long-term effects.