1/ $Novo-Nordisk A/S(NVO)$ was once a market darling, now everybody hates it.
Yet, growth is still strong, the oral Wegovy is coming this quarter, and it has the strongest pipeline in weight-loss drugs.
Here is why NVO is a 2x opportunity now: 🧵
2/ Let's set the stage first: What does NVO do?
NVO is the global leader in diabetes treatment with a 33% market share.
This market has three main segments:
- Oral Anti-Diabetes drugs
- Insulin
- GLP-1
NVO holds the leadership position in all these markets.
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3/ It currently controls 42% of the global insulin market.
This has traditionally been Novo Nordisk's biggest business.
However, the balance is shifting.
Last year, insulin made up only 18% of the shares, while GLP-1 products made up 50% of all sales.
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4/ NVO is dominating global GLP-1 market too.
It currently controls over 52% of the global GLP-1 market.
Within this market, the fastest-growing category is GLP-1 for weight loss.
NVO is dominating that market too.
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5/ It currently has a 57% global market share in weight-loss drugs.
This market grew 142% since 2022, and market research firms project it to become a $130 billion market by 2035.
So, here is the question:
If NVO is so dominant, why does the stock keep falling?
Let's dig.
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6/ The main reason is competition.
$Eli Lilly(LLY)$ weight-loss drugs Mounjaro and Zepbound rapidly took market share from $Novo-Nordisk A/S(NVO)$ since their launch.
On top of that, Novo's upcoming drug Cagrisema disappointed in trial results.
These created the perception that NVO will lose the market to LLY.
I don't think that will happen.
Let me explain:
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7/ NVO has oral Wegovy coming later this year.
It'll be the first oral GLP-1 in the market as Lilly's Orforglipron will be launched in early 2026.
Plus, Novo's oral Wegovy is superior to Lilly's Orforgliprin as it provides 16.6% weight reduction after 64 weeks, while Orforglipron delivered 12.4% after 72 weeks.
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8/ NVO has the best weight-loss pipeline in the industry.
It currently has two Phase-III drugs:
- Cagrisema
- Oral Wegovy
I have already explained above that oral Wegovy is superior to $LLY's Orforglipron.
Cagrisema is intended to challenge Zepbound as it delivers more or less the same performance as Zepbound.
Two Phase-I drugs, Amycretin and Tri-Agonist, are the real gems.
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9/ Amycretin and Tri-Agonist are superior to all drugs in the pipelines of other companies.
Amycretin will rival $LLY pipeline drug Retatritude.
Though both drugs offer 24% weight reduction, Amycretin provides it in 36 weeks, while it takes 48 weeks for Retatritude.
Currently unnamed Tri-Agonist has no peer in Lilly's pipeline, and it showed 15% weight reduction in just 12 weeks.
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10/ Despite a strong market position, the valuation remains cheap.
NVO generated $46 billion in revenue in the last twelve months.
Even if we assume just 10% annual growth for the next 5 years, it'll generate $74 billion in revenue in 2030.
Assuming a stable 35% net margin, it'll generate $26 billion in net income.
Slap a conservative 15x earnings, and we have a $390 billion company.
It's currently valued at $166 billion, meaning it can easily double in the next 5 years even on conservative assumptions
.
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