Novo Nordisk (NVO) CEO Lars Fruergaard Jorgenson has been grilled by a U.S. Senate Committee over the high-cost of the company’s diabetes and weight loss medications.
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Jorgenson was questioned by the Senate Health, Education, Labor and Pensions Committee as to why Novo Nordisk’s bestselling weight loss drug Wegovy costs $1,349 per dose in America. By comparison, the medication costs $265 a dose in neighboring Canada. The $969 charged per dose for the company’s Ozempic diabetes drug was also raised with the CEO.
While Jorgenson didn’t say Novo Nordisk would lower prices, he did offer to address what he called “structural issues” on pricing. The high prices charged in the U.S. are also partly due to pharmacy benefit managers. Governments in other countries, such as Canada, cap prescription drug prices that companies can charge.
Blockbuster Drugs and Stock Price
The Senate grilling was particularly harsh from independent Senator Bernie Sanders of Vermont, who told Jorgenson to “stop ripping us off.” The Senate Committee noted that Novo Nordisk has earned nearly $50 billion in sales from Wegovy and Ozempic, with the majority of that revenue coming from America.
The brisk sales of the diabetes and weight loss drugs has led to a sharp rise in NVO stock, which has gained nearly 400% in the last five years. Denmark-based Novo Nordisk is now the most valuable publicly traded company in Europe with a market capitalization of $426 billion.
Is Novo Nordisk Stock a Good Buy Right Now?
Wall Street analysts have a Moderate Buy consensus rating on NVO stock based on six Buy, one Hold and one Sell recommendation assigned in the past three months, as indicated by the chart below. After a 39.92% rally in its share price over the past year, the average NVO price target of $149.92 implies 13.1% upside potential.
