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Novo Nordisk, the Danish pharmaceutical group behind the Wegovy weight-loss drug, briefly overtook French luxury conglomerate LVMH on Friday to become Europe’s most valuable company.
The pharmaceutical company’s market capitalisation narrowly exceeded $421bn for part of the trading day, taking it past LVMH, maker of Moët & Chandon champagne and Louis Vuitton designer goods. LVMH earlier this year became the first European company to cross the $500bn valuation barrier.
The Danish company is the only pharmaceutical producer on a list of Europe’s most valuable companies heavily skewed towards the luxury sector. Other luxury houses in the top 10 by market capitalisation are France’s L’Oréal, the cosmetics maker, and Hermès, the fashion house.
Novo’s success with Wegovy has increased the value of its shares more than fourfold since 2018. The company’s market capitalisation hit an even higher peak — of $423bn — in August after the company published trial data showing that Wegovy reduced the risk of serious cardiac events like heart attacks by 20 per cent. However, LVMH’s valuation at that point was higher.
Also in August, Novo raised its annual sales forecast partially thanks to increasing demand for Ozempic. The drug, which is designed for diabetics and contains the same active ingredient as Wegovy, has also been prescribed by clinicians to treat obesity.
Emily Field, an analyst at Barclays, said Novo Nordisk had been exciting pharmaceuticals specialists ever since Wegovy was approved in the US two years ago. It was now coming to the attention of a much wider group of investors, however.
The recent positive results from its study of the impact of Wegovy on heart conditions, which came on the same day as very strong earnings from its rival Eli Lilly, changed the game, she added.
“It felt like it woke a lot of people up to the story,” she said.
She said that, while Europe did not have as large a biotech sector as the US, there were some “amazing companies” with innovative scientists like those at Novo Nordisk.
The results led analysts to predict that Novo would be able to persuade more insurers and health systems to pay for the drug.
Novo is the largest producer by sales in a rapidly expanding market for diabetes and new weight-loss drugs that has been forecast by analysts to reach $130bn-$140bn in annual sales worldwide.
Indianapolis-based Eli Lilly is the Danish company’s largest competitor in the field. Eli Lilly has applied for regulatory approval to use its diabetes drug Mounjaro to treat obesity.
The expansion of the market has also led Chinese companies to develop domestic copycat versions of Wegovy.
Novo has also announced plans to acquire Inversago Pharma, which specialises in drugs that target metabolic disorders like diabetes and can also be used to treat obesity, in a deal worth up to $1.1bn.
The Danish company’s significance for its home country has become such that its performance was the only factor in ensuring that Denmark’s economy expanded rather than contracted in the second quarter this year.
Additional reporting by Richard Milne
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