Novo Nordisk (NVO) became Europe's most valuable company when its market cap surpassed $421 billion last Friday, overtaking LVMH (LVMUY), the parent company of luxury brands including Louis Vuitton and Dior, which had held the title since 2021.
Novo's stock continued to climb after the holiday weekend, reaching a new market cap of $429 billion Tuesday, as LVMH's stock declined. The company's rise also makes Novo more valuable than the GDP of its home country, Denmark ($398.3 billion).
The pharmaceutical giant had a strong year thanks to its hugely popular diabetes and weight loss drugs, Ozempic and Wegovy, respectively. On Tuesday, the company launched Wegovy in the UK, further boosting its stock.
The injectables are part of a growing market for GLP-1s, drugs that mimic a hormone in the body to slow digestion, which have been around for some time. But stronger weight loss results compared to previous drugs in the category catapulted Ozempic and Wegovy (known informally by their key ingredient, semaglutide) into the mainstream.
In fact, the sudden popularity of the drugs has caused a shortage of some doses — a problem that Novo Nordisk is actively trying to solve with its contract manufacturers. But even so, the drugmaker has said it is unlikely to meet the skyrocketing demand in the near future.
"I think for the foreseeable future, we'll have a situation where demand will be larger than what we can supply," said CEO Lars J?rgensen at a recent event.
The company has been forced to slow production of lower doses — which are used by newer patients — in order to help maintain the weights of patients who are already on the drugs.
Chief financial officer Karsten Knudsen said as much during the company's earnings call last month.
"The only responsible way to manage this as a company is, of course, that the patients starting on Wegovy, they should be able to titrate up to the 2.4 milligram dose and, thereby, achieve the benefits. The best way to do that is, of course, not to start more patients than we can secure continuity of care and then, furthermore, not to launch in more [markets] than we can support," she said.
The Danish company counts the US as its largest market for GLP-1s this year, as it has only launched in a handful of European markets. In its latest earnings, Novo said GLP-1 diabetes sales, which includes Ozempic, were up 49% and obesity care growth, for Wegovy, was up 158% year over year. The company recorded $5 billion alone from these products in the first half of the year — which accounts for 50% of the company's sales year to date.
At the end of 2022, the company noted it had more than half of the GLP-1 market share. It currently has the most drugs from a single company in the category on the market. Eli Lilly (LLY) has its own GLP-1 drug, Mounjaro, which is approved for diabetes and is awaiting FDA approval to treat weight loss.
Follow Anjalee on Twitter @AnjKhem.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance