At the beginning of 2020, novo nordisk (NYSE:NVO) It was worth about $150 billion. Currently, the company's market capitalization exceeds $500 billion, making it one of the most valuable healthcare companies in the world.
A big part of the reason is the growing popularity of two drugs: Ozempic and Wegovy. Both are associated with helping patients lose significant weight. Thanks to social media, demand for this treatment has exploded and stock prices have reached new heights.
But how dependent is Novo Nordisk on these two drugs? And does it pose a risk to investors?
Obesity care sales were behind strong fourth quarter numbers
In the last three months of 2023, Novo Nordisk achieved 37% year-on-year revenue growth, with net sales totaling 65.9 billion Danish kroner ($9.9 billion).
One big reason is that bariatric care sales increased by 105%. What's important to note for investors is that obesity care includes Wegovy and Saxenda; not included Ozempic is a drug used off-label by diabetics as a treatment for weight loss.
Ozempic and Wigovy as a percentage of Novo Nordisk's sales
Wegovy is still in its early stages of growth, with sales of DKK 9.6 billion ($1.4 billion) last quarter, compared to Ozempic's sales of just over DKK 30 billion ($4.5 billion). Together these accounted for his 60% of the company's total revenue.
The company also has an oral version of Ozempic called Rybelsus. And when you include that revenue ($886 million), nearly 70% of his revenue comes from just three of his products. The company is still working on a verbal version of his Wegovy, which, if approved, could become another huge revenue-generating product for the business.
For some investors, the company may not be diverse enough to be a safe long-term investment. But at the same time, focusing on high-need areas with great long-term potential, such as diabetes and obesity, can focus companies' efforts, increase efficiency, and improve overall outcomes.
Is Novo Nordisk a good stock to buy?
There is no doubt that Novo Nordisk relies on Ozempic and Wigoby. And in the future, we may become even more dependent on oral weight loss drugs. But every healthcare company has one or two key products that are critical to its long-term success. For growth-minded investors, the lack of a more diversified growth product shouldn't deter you from buying Novo Nordisk stock.
This is a powerhouse company that has been developing diabetes and weight loss products for many years. The company is well-positioned to meet the growing needs of these areas of healthcare in the future, which makes it a great stock to have in your portfolio today.
Should you invest $1,000 in Novo Nordisk right now?
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David Jagielski has no position in any stocks mentioned. The Motley Fool recommends Nordisk. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
