Weight loss medications have grown in popularity in recent years. People even use a drug like Ozempic, although it is only approved for diabetes, simply because it helps them lose weight. In the last three months of 2022 alone, more than 9 million prescriptions for weight loss drugs were dispensed in the United States. In less than three years, the number of prescriptions has increased by 300%.
People rushed to use weight-loss drugs — and actions of Novo Nordisk (NVO 1.96%), the company that makes Ozempic, has also surged more than 150% in three years. But there could be a significant risk with Ozempic and other similar drugs, namely side effects.
Reports of concerning side effects
In Canada, at the University of British Columbia, researchers concluded in an epidemiological study that Ozempic, along with other GLP-1 receptor agonists aimed at controlling a person’s appetite, could cause increased risk of stomach paralysis. This means that the flow of food into the body stops, which can cause continued vomiting. Media reports have also reported a higher risk of intestinal obstruction with these medications.
Other potential side effects may have been linked to GLP-1 medications, including suicidal thoughts. In Europe, regulators are also concerned about whether they can increase the risk of thyroid cancer.
Of course, it is important to remember that these drugs have undergone rigorous regulatory approval. Yet these drugs are still in their early stages of growth; it can be difficult to know for sure what the long-term side effects might be – and whether it could potentially deter people from using them in the future.
While clinical studies often include thousands of people, many more people take approved drugs once they hit the market. And on a larger scale, more aberrant symptoms and side effects could arise that might not have been identified as risks in clinical trials.
Another risk for Novo Nordisk
Another risk for Novo Nordisk is simply the potential competition ahead. Depending on how its products compare to other weight loss drugs and treatments, this could significantly affect their growth potential. People will naturally want to take the medications that achieve the highest rate of weight loss.
Pharmaceutical competitor Elie Lilly working to get diabetes treatment Mounjaro approved as a weight-loss drug; in clinical trials, it showed that it could help people lose even more weight than Wegovy and Ozempic. Pfizer is also working on danuglipron, a diet pill that has achieved comparable results to Ozempic, although at a much higher dosage.
Wegovy and Ozempic accounted for half of Novo Nordisk’s revenue in the first half of this year. This percentage is likely to increase as the drugs continue to gain popularity and the company rolls out Wegovy to more markets. The success of the company and the title may inevitably be linked to the success of these two drugs.
Should you buy Novo Nordisk shares?
Reports of potential side effects linked to GLP-1 drugs are concerning, but are unlikely to derail Novo Nordisk’s growth prospects just yet. Given that there has been a huge increase in prescriptions, with millions dispensed in the United States alone, if there was a huge immediate problem with these drugs, it would probably be well known by now.
Many people are desperate for effective weight loss options, and it is true that most medications come with side effects. For now, this isn’t a huge risk for Novo Nordisk, but it’s one that investors should keep an eye on as more data comes out. Overall, Novo Nordisk remains a great growth-oriented company to invest in. It could continue to generate excellent returns in the long term.
David Jagielski has no position in any of the stocks mentioned. The Motley Fool holds positions at and recommends Pfizer. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
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