Global pharmaceutical company Novo Nordisk A/S (DE:NOV) (NVO) is betting big on its research and development to beat its competitors and lead the booming weight-loss market. The company is currently leading the charts with its weight loss drug, Wegovy, along with Eli Lilly & Co.’s (LLY) rival drug Mounjaro.
Novo Nordisk manufactures and sells medicines, specializing in treating diabetes, obesity, Alzheimer’s disease, and more. Novo’s Denmark-listed shares have gained 25.4% year-to-date.
Novo and Lilly Dominate the Weight-Loss Arena
At present, Novo and Lilly are at the forefront of GLP-1 drugs, which are used for diabetes and obesity. Novo’s weight loss drug Wegovy (semaglutide) received approval in 2021, specifically for the treatment of obesity. Meanwhile, Novo’s Ozempic and Lilly’s Mounjaro (tirzepatide) are medicines for diabetes and are also prescribed off-label for weight loss.
Moving ahead, Novo is conducting a trial for its pipeline drug, CagriSema, a next-generation treatment that combines semaglutide with another compound. Once approved, the drug will compete directly with Lilly’s FDA-approved Zepbound. Novo Nordisk has over 45,000 participants in ongoing or planned trials for semaglutide, as well as CagriSema. On the other hand, Lilly has 50,000 patients involved in trials for tirzepatide and its next-generation retatrutide.
Novo’s Efforts to Stay Ahead
The global demand for weight-loss drugs is significantly growing amid the obesity crisis and improved health awareness among customers. Consequently, Novo and Lilly are struggling to meet the high demand for their weight-loss medications.
To sustain its leading position, Novo is investing in expanding its manufacturing facilities, adding more factories, and signing more deals with contract manufacturers. Additionally, Novo is significantly increasing its research and development budget. In 2023, the company allocated $4.7 billion to research and development (R&D), representing 14% of sales and marking an increase from 12% of sales in 2020.
The company plans to extend the use of its drugs to treat children, boost its sales by targeting Asian populations, and carry out direct comparisons with Mounjaro.
Investors are worried about increasing supply issues and are looking for answers in the upcoming quarterly report. Novo Nordisk A/S will publish its first-half results for 2024 on August 7.
Are Novo Nordisk Shares a Buy?
As per the consensus rating on TipRanks, NOV stock has received a Moderate Buy rating, supported by eight Buys, three Holds, and one Sell. The Novo Nordisk share price forecast stands at €132.17, which is around 13.14% above the current trading level.
