Wegovy obesity drug frenzy drives Novo past $500bn stock market value

Novo Nordisk’s earnings sparked fresh optimism as the company said revenue could grow by as much as 26% this year and operating profit by up to 29%

Wegovy weight loss drug: Some analysts are sceptical that the stock market performance of drugmaker Novo can last.

Denmark's Novo Nordisk has become the second-ever European company to pass $500bn in stock market value, bolstered by an upbeat outlook for its blockbuster obesity drug Wegovy.

Novo crossed the valuation line on Wednesday, reaching a level only attained by Dior-owner Louis Vuitton LVMH, as its shares extended recent gains.

The Danish pharma company has roared past the luxury-goods giant, vaulting into the limelight as Wegovy for obesity and a sister medicine for diabetes, Ozempic, proved they could help people shed unwanted weight by curbing their appetites. 

Novo’s earnings sparked fresh optimism as the company said revenue could grow by as much as 26% this year and operating profit by up to 29%. The guidance looks conservative, according to Bloomberg Intelligence analyst Michael Shah.

The drugmaker has struggled to keep up with demand for both Wegovy and Ozempic, which share the same active ingredient. On Wednesday, it said it has more than doubled the number of Wegovy starter doses it’s shipping to the US, enabling more people to get on the treatment. 

The company announced $8.7bn in investments last year to beef up its manufacturing capacity. Whether that translates into long-term sales will depend on two factors: Competition from Eli Lilly's Zepbound, introduced late last year, and how long people are willing to keep taking the medicine. 

Wegovy’s side-effects include vomiting and diarrhea, and its list price in the US is $1,349 (€1,240) a month. 

Novo shares have gained 60% in the past year, fuelled by the obesity frenzy. They rose as much as 4% in Copenhagen trading in the latest trading session. 

Some analysts are sceptical that Novo’s performance can last. The shares are expected to decline around 3% over the next 12 months, according to data compiled by Bloomberg.