In early 2020, New Nordisk (NYSE: NVO) it was worth about 150 billion dollars. Today, its market capitalization is north of $500 billion, making it one of the world’s most valuable healthcare companies.
A large part of this is the growing popularity of two drugs: Ozempic and Wegovy. Both have been linked to helping patients lose significant amounts of weight. Thanks to social media, demand for treatments has skyrocketed, pushing the fund to new heights.
But how dependent is Novo Nordisk on these two drugs, and does this pose a risk to investors?
Obesity care sales were behind strong Q4 numbers
During the last three months of 2023, Novo Nordisk achieved 37% year-over-year revenue growth with net sales of 65.9 billion Danish kroner ($9.9 billion).
One big reason was the company’s 105% revenue growth in obesity care sales. Important for investors to note is that obesity care includes Wegovy and Saxenda, but this not included Ozempic, a diabetes treatment, is used off-label by patients as a treatment for weight loss.
How much Ozempic and Wegovy consider Novo Nordisk’s top line
Wegovy is still in its early stages of growth and generated 9.6 billion Danish kroner ($1.4 billion) last quarter, while Ozempic’s sales were 30 billion Danish kroner ($4.5 billion). Together they accounted for 60% of the company’s total revenue.
The company also has an oral version of Ozempic called Rybelsus. If you include its revenue ($886 million), that’s about 70% of the revenue from just three products. The company is still working on an oral version of Wegovy, which, if approved, could be another big revenue-generating product for the business.
For some investors, the company may not be diversified enough to be a safe long-term investment. But at the same time, focusing on some high-need areas like diabetes and obesity, where there is great long-term potential, can help focus a company’s efforts and lead to greater efficiency and better overall results.
Is Novo Nordisk a good stock to buy?
There is no doubt that Novo Nordisk is dependent on Ozempic and Wegovy. In the future, he may become more dependent on oral medication for weight loss. But every healthcare company will have one or two core products that are critical to its long-term success. For growth-oriented investors, the lack of more diversified growth products should not deter them from buying Novo Nordisk stock.
This is a powerful company that has been developing diabetes and weight loss products for years. It is well positioned to meet the growing need in these areas of healthcare in the future, so it could be a great stock to put in your portfolio today.
Should you invest $1,000 in Novo Nordisk?
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David Jagielski has no position in any of the listed stocks. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.