Obesity is linked to more than 60 chronic diseases, including diabetes, heart disease, stroke, and some forms of cancer; these represent the leading causes of preventable, premature deaths, notes Carl Delfeld, global investment expert and editor of Cabot Explorer.
Scientific studies show that the obesity epidemic threatens the lives of 100 million Americans and half a billion more people overseas. Aside from the premature loss of life, obesity costs Americans about $150 billion each year and people with obesity pay $1,429 more in medical costs each year compared with those of average weight.
Obesity is a complex chronic disease, and losing weight is not just a question of eating less and exercising more. Even those that eat healthy and exercise regularly can struggle with weight issues and Danish pharmaceutical multinational Novo Nordisk (NVO) is trying to help.
Novo specializes in treatments for diabetes, hemophilia, and obesity. The company supplies half of the world’s insulin, and its diabetes care products are used by over 34 million people today.
The company also has developed a new drug that lets people lose as much as 20% of their body weight. This drug is based on decades-old research that a hormone called glucagon-like peptide-1 — or GLP-1 — is released after food intake.
This hormone boosts insulin levels and reduces appetite. After clinical trials showed that this treatment is both safe and effective, the U.S. Food and Drug Administration (FDA) in 2014 approved Novo’s treatment in 2014.
In 2017, Novo introduced the follow-on Ozempic, a once-a-week injectable treatment for diabetes that is even better at reaching brain receptors that limit food cravings. Novo got FDA approval to market this product in June 2021 and branded it Wegovy.
Today, Wegovy is one of the fastest-growing drugs in the nation. Fortunately, the use of Wegovy is also associated with lower blood pressure, better cholesterol readings and less inflammation likely leading to less hypertension, heart disease, stroke, cancer and perhaps even dementia. Studies to clinically prove all of this are underway.
Novo’s total sales already exceed $167 billion a year and for the quarter ending in September, earnings were up 19% on a 28% increase in revenue. Novo is also executing a $3 billion share repurchase plan.
In summary, based on its sizable and growing demand for this weight-loss drug, this well-managed, highly profitable company with an excellent growth profile has limited risk and potential to develop new products. Its stock is outperforming the market, indicating relative strength.
