Novo Nordisk's Expanded Indication for Wegovy Signals a Major Growth Opportunity
Let the good times roll
Most of the chatter surrounding Novo Nordisk stems from its blockbuster drug Ozempic. While losing weight can be a byproduct of taking Ozempic, the treatment itself is not FDA approved for weight loss. Instead, the FDA granted approval for chronic weight management to Wegovy. Interestingly, both Ozempic and Wegovy use the same compound -- semaglutide.
What does this mean for Novo Nordisk?
Wegovy's expanded indication opens up a lot of doors for Novo Nordisk. However, I see the approval for cardiovascular disease as particularly important.
- Precedence Research states that the addressable market for cardiovascular drugs will exceed $200 billion by 2032
- Data from the Centers for Disease Control and Prevention suggest heart disease is the leading cause of death in the U.S.
- The World Health Organization estimates that ischemic heart disease and stroke were the top-two causes of death worldwide in 2019
It's important to note that it takes years to analyze data collected by institutions such as the CDC and WHO. So while some of these health trends could change, the bigger theme is that Novo Nordisk is now operating within an enormous market with unprecedented challenges.
Is now a good time to buy Novo Nordisk stock?
Novo Nordisk stock currently has some momentum pushing it higher. The stock is up 30% already this year, and shares are hovering near all-time highs. While some of this is driven by the company's blowout fourth-quarter earnings report, combined with the latest news from the FDA, I think there is more at play here.
- Novo Nordisk appears well-positioned to continue dominating in two growing markets
- The expanded indication for Wegovy presents an opportunity to disrupt a significant part of the healthcare spectrum
- Despite its premium valuation, now is a good time to invest in Novo Nordisk for the long term
A prudent strategy is to use dollar-cost averaging and gradually add to your position over time as the company's long-term execution plays out.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.