It is true that there is always a tail risk in the pharmaceutical industry with these, but it’s important to understand that these GLP-1 analogues are not very new things. There is a lot of patient data from years of use, and by now, serious side effects would very likely have already been identified. At least those that would tip the benefit-risk balance. I argue that the risks of a flop are very small.
A good example of a long-used drug that nevertheless experienced this tail risk is Litalgin:
Here too, it’s good to note that the recall came because the ratio of harms to benefits was re-evaluated such that the risks were too great in relation to the benefits.
The benefits of GLP-1 analogues are already undeniable, and new news and benefits for various ailments are constantly emerging from the research side of the field. As the number of benefits grows at this rate, I consider the probability of these being withdrawn / sales collapsing due to some new unexpected harm to be vanishingly small.
Addition:
It should also be said that a Novo representative stated this week that they expect Kela reimbursement for Wegovy during this year. And specifically for the weight management indication. This was quite interesting, but of course, a rather small matter by Novo’s group standards.
I also don’t believe the entire drug group will be withdrawn, but if within 5 years there are 5-10 GLP-1 preparations of similar efficacy on the market, then the side effect profile may determine the doctor’s choice.
And in this, chance matters.
In addition, most data on rare harms accumulates from molecules that have been on the market the longest.
Yep. But it doesn’t practically affect the investment case or a doctor’s decisions in any way. This is exactly the kind of thing that might be found, hardly anything bigger anymore.
This is a completely valid point, and it’s true that it’s somewhat by chance who will have the best GLP-1 analogs on the market in, say, 2030, 2035, and 2040. The global pipeline for these is that tight. Novo and Lilly have already won the market for this decade, but the longer game is open. Of course, I believe that Novo’s probabilities of succeeding in this bigger picture are quite good, but not a clear victory march unlike the coming years.
How many regular users do these different GLP-1 products have for weight loss? Are there any statistics on that? What is the average duration of use?
If I were a doctor myself, I would prescribe sneakers, a gym membership, or a personal trainer in 9/10 cases, but of course, that requires work from the patient.
I certainly don’t have access to such data. The companies surely have an idea, but I haven’t come across it. Someone wiser might answer.
People know this. The cause of obesity is always simple in theory (energy intake is greater than energy expenditure), but in reality, the phenomenon is much more complex and requires various kinds of expertise and approaches, especially psychological expertise. When you work as a doctor, it quickly becomes clear that it doesn’t help much to “prescribe” running shoes, a gym membership, or a personal trainer during a single visit.
Well, that’s enough on the topic from my part, as it’s already straying a bit off-topic, apologies.
I just meant that before enough statistical data on users exists, one cannot say that a doctor’s decisions to prescribe medication for weight loss could not be questioned. Here, medicine relies on that thick tome in every matter. Even though I also have an investment in the company, I approach the long-term success of this GLP-1 with great caution for now.
Novo’s CMD or quarterly materials might have more information, but here’s a recap from the news I translated a few messages above. As stated in the articles I linked, this is a so-called production capacity-limited business for Novo and Lilly. Demand is higher.
edit. as an experiment with notebookLM search
I also asked for Q4 conclusions from the companies:
If Wegovy becomes eligible for Kela reimbursement, how much could that lower the price for the consumer?
Because currently the price of the said medicine is far too high for the average citizen, then, based on typical price elasticity, demand will increase if society funds a part of it. And, just shouting from the sidelines, it’s impossible to know the truth, of course, but based on a gut feeling, a good guess would be that Wegovy’s price has nothing to do with production costs, but because its efficacy is better than other Novo Nordisk medicines, the profit margin is better.
What this would be in euros, well, who outside Novo Nordisk could calculate that. But the direction is good.
If Kela reimbursement is obtained, the patient pays annually for ALL their reimbursable medicines a maximum of the annual deductible, which this year is €633. The same annual deductible has been met with other GLP-1 analogues, if the patient has met the criteria for medicine reimbursement.
Everything exceeding that €633 (i.e., the majority) is thus paid by society.
The top U.S. import from the EU in 2024, by category and dollar value, was pharmaceutical products, according to data from the U.S. Trade Census analyzed by ImportGenius. Included in that $127 billion worth of EU imports was semaglutide, an ingredient used in the popular GLP-1 weight loss drugs from Novo Nordisk
and Eli Lilly
, such as Ozempic, Wegovy, and Mounjaro. The GLP-1 compound was the sixth-largest import from the EU to the U.S., at $15.6 billion.
The drug and medical industry, overall, will experience among the most significant tariff impacts by sector. Surgical and medical instruments imports were valued at $37 billion; medical devices, which span CRT Machines, respirators, orthopedic devices, and surgical equipment, tallied $22 billion. Vaccines, hearing aids ($1.3 billion) and artificial joints ($2.5 billion) were also among top imports in 2024.
I read somewhere that Ozempic would also be manufactured in the USA. How much do tariffs really affect Novo?
Competition seems to be intensifying in the USA, and it’s a bit difficult for me to assess Novo’s competitive advantages. The company’s history is certainly impressive, and like Terry Smith, I’m more interested in Novo’s opportunities to develop new medicines and how it practically owns the entire chain. Still, I’m a bit concerned about the US market dynamics.
These weight-loss drug companies seem to be quite hot right now (maybe it would be wise to stay away from this sector for a while?); Novo’s stock dropped because Hims & Hers advertised its own product during the Super Bowl However, it’s hard to ignore the stock drop of such a giant company. Perhaps we can at least state that the stock went into a bubble and is now normalizing. My hands are already bleeding from Neste, but perhaps in this situation, the market isn’t going under…
Novo is now trading below its 10-year EV/EBIT median. Not necessarily a magical buying opportunity even so.
This is starting to look alarmingly like Neste’s share price; is Novo Nordisk a falling knife after all?
There are quite a few risks on the horizon:
The company’s stock trades at high multiples (forward P/E around 25–27), which makes it susceptible to corrections if growth slows or earnings miss expectations.
Regulatory pressure on drug pricing affects the company’s margins.
New restrictions or requirements for drug approval and sales.
Competitors, such as Eli Lilly, are developing effective diabetes and obesity drugs that could take market share.
If new drugs developed by the company do not receive approval or prove to be as effective as expected, it could weaken growth prospects.
Availability problems with raw materials and active pharmaceutical ingredients.
I looked into the statistics. According to estimates, about 6% of US adults currently use GLP-1 medications, meaning about 15 million adults are regular users.
According to UBS’s estimate, by 2029, approximately 40 million people globally will be using GLP-1 medications, of whom 44%, or about 17.6 million, would be in the United States.
So, for next year, US approvals are planned for Eli Lilly’s oral preparation and Novo’s injection, with more to come in the following years.
Regarding Novo, what mainly concerns me is whether the carrot man’s (porkkanamiehen) administration is trying to somehow slow down the approvals of new foreign drugs.
However, it’s hard to ignore the stock drop of such a giant company. Perhaps we can at least state that the stock went into a bubble and is now normalizing. My hands are already bleeding from Neste, but perhaps in this situation, the market isn’t going under…
