Novo Nordisk, Denmark’s pharma company, producing anti-diabetic insulin, Ozempic and Wegovy entered the anti-obesity market worth billions of dollars and witnessed a spectacular rise. It is equivalent to the rise of Nokia of Finland in the cell phone market, till it was displaced by other smart phones including Apple’s iPhone. Can Novo go the Nokia way?
Novo’s share declined by 21 per cent. There was a trial of next generation anti-obesity drug CagriSema. The drug fell short of 25 per cent weight loss that was predicted. The recorded weight loss hovered between 20.4 per cent to 22.7 per cent over a period of 68 weeks. It is close to rival Eli Lily’s Zepbound shot. However, it dilutes the European firm’s market leadership.
Eli Lily’s Zepbound has a 40 per cent market share in the USA. It acquired this share in less than a year. Lily is trying an experimental compound retarturide that showed a 24 per cent weight loss in a similar trial. There are other competitors such as Amgen and Pfizer who are eyeing this market. There is patent expiry of Wegovy in the early 2030s. Some of these developments may affect Novo sales by 2030.
The developments are in the interest of the consumer and yet these are quite humbling for Europe. Goldman Sachs group has devised an acronym for mega-cap — GRANOLAS capturing top companies with a competitive advantage — GSK, Roche, Astra Zeneca, Novo Nordisk, Nestle, Novartis, L’Oreal, LVMH, ASML and SAP.
There are spillover effects of Novo’s boom — it employs 32000 people in Demark, there are new manufacturing sites in France, and substantial exports. These could become vulnerable and could also affect Denmark’s currency. Still Novo is a well-diversified company, and we cannot imagine a Nokia-like effect. There could be a different ending this time.
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