Novo
Nordisk
(NOVO
B)
will
release
its
full-year
earnings
on
January
31
at
07:30
Central
Eastern
Time.
Novo
Nordisk
has
sprinted
ahead
in
Europe’s
pharmaceutical
sector
and
the
Morningstar
Europe
Index
on
the
back
of
an
overwhelming
demand
for
its
diabetes
and
weight
loss
drugs.
Achieving
its
2023
targets
seems
likely,
given
the
robust
financial
performance
in
the
first
nine
months
of
2023,
with
a
33%
increase
in
sales
and
a
37%
growth
in
operating
profit
at
constant
currencies.
The
updated
2023
guidance
in
the
earnings
report
for
the
third
quarter,
projected
at
32%-38%
top-line
growth
and
40%-46%
operating
profit
growth,
slightly
surpassed
previous
expectations.
The
strong
performance
is
attributed
to
higher-than-anticipated
US
sales
of
GLP-1
therapies,
particularly
driven
by
the
diabetes
drug
Ozempic
and
the
obesity
drug
Wegovy.
Will
Novo
Meet
Surging
Demand?
The
surging
demand
for
the
diabetes
and
weight
loss
products
has
led
to
high
markets
expectations
for
the
upcoming
earnings
report.
“There
are
certainly
very
high
expectations,
and
we’re
assuming
the
firm
can
see
28%
revenue
growth
and
37%
operating
profit
growth,”
says
Morningstar
equity
and
credit
analyst
Karen
Anderson
ahead
of
Wednesday.
“I
think
Novo
Nordisk
and
Eli
Lilly
are
poised
to
dominate
this
market
for
at
least
the
next
several
years,
while
competitors
try
to
play
catchup
and
design
more
convenience
orals,
or
products
with
fewer
tolerability
issues.
Overall,
we
see
a
more
than
$100
billion
market
for
obesity/overweight
drugs
by
2031,
when
Novo’s
key
patent
expires.”
However,
the
upcoming
challenge
lies
in
how
quickly
the
firm
can
adapt
its
manufacturing
scale
to
meet
new
demand
for
its
blockbuster
drugs
Ozempic
and
Wegovy, while
fending
off
competition
from
Eli
Lilly
&
Co.’s
Mounjaro
and
Zepbound.
“Lilly
is
very
new
to
the
obesity
market,
with
the
recent
approval
of
its
diabetes
drug
Mounjaro
as
Zepbound
for
obesity,”
she
says.
“Zepbound
looks
more
effective
than
Wegovy,
so
we
expect
it
to
quickly
gain
significant
share
of
this
market –
but
there
is
plenty
of
room
for
both
firms
to
see
strong
double-digit
growth
for
years”.
The
Key
Question:
How
Long
do
Treatments
Last?
The
market
also
wants
to
know
how
long
the
average
patient
remains
on
weight
loss
therapies.
Do
they
continue
beyond
their
plateau
point
when
they
have
stopped
losing
weight?
“All
the
data
points
to
a
need
to
continue
therapy
to
maintain
weight
loss,
and
we
think
patients
will
be
motivated
to
stay
on
therapy
longer
term,
although
we
do
see
some
patients
dropping
off
therapy
due
to
affordability
or
tolerability
issues”,
Andersen
explains.
In
terms
of
Novo
Nordisk’s
pipeline,
the
analyst
says
we
could
see
early
data
for
a
next-generation
oral
obesity
drug
in
conjunction
with
earnings.
Later
in
the
year
she’s
expecting
more
data
on
the
firm’s
oral
semaglutide
(the
drug
also
used
in
Ozempic
and
Wegovy).
“Although
we
think
the
launch
is
likely
to
be
delayed
due
to
supply
concerns
(a
much
higher
dose
is
needed
for
oral
delivery
of
this
drug)
the
most
important
pipeline
drug
for
Novo
at
this
point
is
cagrisema,
which
could
be
a
more
effective
and
more
tolerable
treatment
in
both
obesity
and
diabetes.
“Phase
3
data
in
obesity
is
coming
later
this
year,
as
well”,
she
adds.
Fair
Value
Estimate
for
Novo
Nordisk
At
the
end
of
November
2023
Morningstar’s
analyst
raised
Novo
Nordisks
fair
value
estimate
to
DKK
540
(£61.72)
per
share
from
DKK
475,
after
significantly
raising
the
assumptions
for
uptake
of
GLP-1
therapies
in
diabetes
and
obesity
as
well
as
adding
sales
for
overweight
patients.
“We
expect
Novo’s
obesity
sales
could
peak
at
$28
billion
(£22
billion) by
2031,
ahead
of
semaglutide’s
2032
patent
expiration,”
Anderson
wrote
in
a
note
published
29
November.
“In
obesity,
semaglutide
forms
the
basis
of
injectable
obesity
medicine
Wegovy
as
well
as
a
potential
oral,
high-dose
semaglutide
that
recently
generated
positive
data
in
a
phase
3
trial”.
Moat
Rating
As
a
pioneer
in
diabetes
care,
Novo
has
been
in
the
business
for
over
85
years
and
claims
32%
of
the
$50
billion-plus
diabetes
treatment
market
and
roughly
half
of
the
more
than
$15
billion
insulin
market.
Diabetes’
prevalence
is
expected
to
soar
in
coming
decades
as
a
result
of
an
increasingly
overweight
and
ageing
population.
Morningstar
expects
Novo
to
maintain
its
Wide
Moat
as
it
continues
to
dominate
the
treatment
marketplace.
Semaglutide’s
potential
in
new
indications
also
gives
Morningstar’s
analyst
confidence
in
Novo’s
wide
moat.
The
drug
received
US
approval
as
Wegovy
in
June
2021
and
is
in
phase
3
testing
in
areas
like
non-alcoholic
fatty
liver
disease,
Alzheimer’s
disease,
and
heart
failure.
Novo
is
also
testing
new
combination
regimens
like
cagrisema
that
could
offer
even
more
compelling
blood
sugar
control
and
weight
loss,
which
could
help
it
maintain
a
solid
positioning
against
Lilly.
Key
Morningstar
Metrics
for
Novo
Nordisk
•
Fair
Value
Estimate:
540
DKK;
•
Current
Price:
732
DKK;
•
Morningstar
Rating:
★★;
•
Morningstar
Economic
Moat
Rating:
Wide;
•
Morningstar
Uncertainty
Rating:
High.
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