Novo Nordisk (NYSE:NVO) stock rose on news that China has approved its weight loss drug Wegovy and that the drugmaker will invest $4.1 billion into expanding its U.S. production capacity.
The expansion will be built in North Carolina and is part of a $11 billion global production push.
Novo Nordisk, which is based in Denmark but trades in New York with the NVO stock ticker, rose 2% overnight to $145 per share.
The Tesla of Pharma
Novo Nordisk pioneered Glucagon-Like Peptide 1 (GLP-1) agonists, generally taken by injection. Its semaglutide was approved for the treatment of diabetes in 2017 as Ozempic. Wegovy was approved for weight loss in 2021.
The drugs have transformed Novo Nordisk, based in the small Danish town of Kalundborg, 60 miles west of Copenhagen. They have also utterly changed the weight loss industry. The old diet-and-exercise market leader, WW International (NASDAQ:WW), formerly Weight Watchers, is now a penny stock.
When Ozempic was first approved, Novo Nordisk was trading at about $26 per share. It is now Europe’s most valuable company by market capitalization. It’s well ahead of the Netherlands’ ASML (NASDAQ:ASML), which makes semiconductor production equipment. Novo is also 20 times more valuable than the next most valuable Danish company.
While Novo Nordisk is the only company in the U.S. with FDA-approved products containing semaglutide, there are many similar drugs competing for the growing market. The leader among the rest is Eli Lilly (NYSE:LLY), whose GLP-1 drug, tirzepatide, is sold as Zepbound and Mounjaro.
The GLP-1 market was worth $57 million in 2018 but $5.7 billion in 2022. It is expected to be a $133 billion market worldwide in 2030.
NVO Stock: What Happens Next?
Novo Nordisk and Eli Lilly are expected to control 80% of the GLP-1 market through the decade. Novo’s patent on Ozempic won’t expire until 2032.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
