Novo Nordisk hits $500 billion in market value as it flags soaring demand for Wegovy, Ozempic

Novo Nordisk on Wednesday reported better-than-expected 2023 earnings, as sales of its wildly popular anti-obesity and diabetes drugs continued to soar.

The maker of weight loss drug Wegovy and diabetes drug Ozempic reported an increase in sales of 31% in Danish kroner and 36% at constant exchange rates (CER) to 232.3 billion kroner ($33.71 billion).

Full-year operating profit jumped by 37% in kroner and 44% at constant exchange rates to 102.6 billion kroner.

The Danish pharmaceutical giant said it expects sales growth this year of between 18% and 26% in CER terms, as demand surges for Wegovy and Ozempic, which contain the same active ingredient.

Novo Nordisk’s valuation rose to $506 billion at 08:06 GMT, according to CNBC’s calculation of LSEG data. The share price moderated slightly through the morning, and was up by 1.6% on the day at 9:15 a.m. London time.

Novo remains Europe’s largest company by market capitalization, ahead of LVMH, which was valued at $422 billion ahead of Wednesday’s market open.

The 2023 results were fueled by strong performance in the company’s diabetes and obesity care division, with obesity care in particular spiking by 154% at CER to 41.6 billion.

“We actually expect the same level of demand in the new year and when you look at the fact that we are only serving a couple of million patients living with obesity, some 40 million people living with diabetes — there is a huge market out there,” CEO Lars Fruergaard Jørgensen told CNBC on Wednesday.

Competition in the weight-loss race has emerged for Novo Nordisk in the form of U.S. stalwart Eli Lilly. The Danish company has acknowledged this is likely to bring downward price pressures in the U.S., although Jørgensen said the competition would ultimately benefit patients.

“If you’re really going to make a big dent in treating people with obesity and preventing some of the follow-on diseases from that, it actually takes more than one company to do that, so I welcome competition that will help establish the obesity market,” he told CNBC’s Charlotte Reed on Wednesday.

“We’re used to competing on having the best products, and the incoming competitor we have been competing with for over 100 years — we have huge respect for each other — so that’s the healthy competition that actually brings better and better care to patients and takes the burden off health care societies. So I think it’s a win-win for not only the two companies, but also for society.”

While prices may have to come down, Novo Nordisk does not see a slowdown in global demand.

“The unmet needs in type 2 diabetes and obesity are growing by the day, and the rising prevalence of these closely related threats to global health has created surging demand for our GLP-1-based therapies,” Jørgensen and Chairman Helge Lund said in Wednesday’s earnings report.

“This has enabled us to reach more patients than at any point in our 100-year history, contributing to strong sales growth across North America and International Operations.”

The company also acknowledged that this had resulted in increased pressure on its supply chain, leading to “periodic constraints” across its portfolio as it struggled to keep pace with demand in 2023.

“We have responded by investing heavily in expanding our production capacity with the aim of serving millions more patients worldwide. In 2023 alone, we announced investments totalling more than DKK 75 billion in the expansion of our production sites across the globe,” the chairman and CEO said.

“With construction now underway on these projects, we strive to operate our existing facilities 24 hours a day, seven days a week, as we produce more of our life-changing medicines than ever before.”

Novo Nordisk said it had now begun to gradually increase supply of lower dosage Wegovy in the U.S., having restricted supply of the starter dose strength since last May.