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Danish drugmaker Novo Nordisk A/S is skyrocketing on the back of strong demand for its blockbuster obesity medicines. The drug is sold cheaper than other treatments for obesity which gives Novo Nordisk ample market capacity.

The success of Novo’s Wegovy and Ozempic injectable drugs has sparked something of a gold rush in the pharmaceutical industry and some analysts predict such treatments could become among the best-selling medicines ever.

• Behind the rapid emergence of the Novo drugs is the GLP-1 agonist, a molecule initially identified to help people with diabetes regulate their blood sugar, but whose appetite-suppressing effects were quickly found to also help people lose weight.
• The drugs have since become so popular that regulators around the world have raised concerns that Ozempic may not be opportune for diabetics who depend on the injection. Because of this, GLP-1 drugs may become the victims of their own success.
• The latest boost came in August when Novo Nordisk said a trial of its weight-loss drug Wegovy had reduced the risk of heart attack or stroke in obese and overweight patients by 20%. The study may broaden access further by aiding Novo in reimbursement discussions with insurers who might otherwise balk at Wegovy’s cost.

Eli Lilly Stock Is Also Flying

• About 40 companies are chasing after Novo for a share of the market, led by Eli Lilly & Co, whose stock has a performance of +52% year-to-date.
• In fact, sales of Eli Lilly ‘s diabetes treatment Mounjaro significantly beat Wall Street estimates in the second quarter, sending the drugmaker’s stock higher and extending investor enthusiasm over the medicine. Sales of Mounjaro, which has Food and Drug Administration approval to treat Type 2 diabetes, were $979.7 million, beating the FactSet consensus estimate of $739.8 million.
• Patients without diabetes who took Mounjaro lost 21.1% of their body weight on average in one trial; Lilly expects the FDA to rule on the company’s application for approval of Mounjaro as an obesity treatment by the end of the year.