A pharmacist displays boxes of Ozempic, an injectable semaglutide drug used to treat type 2 diabetes manufactured by Novo Nordisk, at Rock Canyon Pharmacy in Provo, Utah, U.S., March 29, 2023.
George Frey | Reuters
Norway’s giant hedge fund, the world’s biggest, has protested the possibility that Danish drugmaker Novo Nordisk and rival U.S. Eli Lilly could be on track to become the first healthcare members of the trillion dollar club.
The comments come as the two companies are seen as the main beneficiaries of growing demand for diabetes and weight loss drugs.
Novo Nordisk, Europe’s biggest company by market capitalization, on Wednesday reported higher-than-expected 2023 profit as sales of its wildly popular drug Wegovy continued to soar. The company’s market value surpassed $500 billion on the news.
The world’s largest pharmaceutical company by market value, Eli Lilly is currently worth about $612 billion.
Gemma Game, Head of Health Strategy at Norges Bank Investment Management, he said Tuesday that the launch of safe and effective weight-loss drugs last year helped make Novo Nordisk and Eli Lilly household names.
The brand names of individual drugs, such as Novo Nordisk’s Ozempic and Wegovy and Eli Lilly’s Zepbound, have become familiar to many.
“The story is far from over,” Game said. “For the billion [of] people living with obesity all over the world today, this is really exciting. Less than a fraction of 1% have been treated so far. So we are early on the launch path.”
NBIM, the world’s largest single stock market investorowns a 2.5% stake in Novo Nordisk and 0.98% in Eli Lilly, according to LSEG data.
Eli Lilly and Company, pharmaceutical company headquarters in Alcobendas, Madrid, Spain.
Cristina Arias | Cover | Getty Images
Obesity, which has significant health implications, is associated with approximately 200 different medical conditions.
NBIM’s Game said it will closely monitor data on whether anti-obesity drugs known as GLP-1 agonists could also effectively treat chronic kidney disease, obstructive sleep apnea and Alzheimer’s disease.
“We just heard about the ‘Magnificent Seven,'” Game said during a press conference, referring to a group of large-cap U.S. technology stocks. “Maybe in the future we’ll be talking about Eli Lilly and Novo Nordisk as the world’s first trillion-dollar healthcare companies.”
American tech giants incl Microsoft, apple and Amazon All valued at more than $1 trillion in market capitalization, while Meta’s market value recently surpassed the milestone for the first time since 2021.
Barclays said last year it expected the global market for weight loss drugs to grow to about $100 billion by the end of the decade.
“If anything, we feel more confident about these forecasts,” Emily Field, head of European pharma equity research at Barclays, told CNBC’s “Worldwide Exchange” on Jan. 8.
“What Novo was able to firmly establish last summer, and we saw more data in the fall, was that not only do you lose weight, but it can have a significant benefit on your cardiovascular health,” he added.
“And this year, we’re trying to see updates in all these other areas where weight loss can lead to other benefits, like kidney disease and also potentially liver disease.”