Demand for Ozempic and Wegovy is reaching new heights. Here’s why it can go even higher. | The motley fool

Ozempic and Wegovy. These are the two drugs that are the focus of any income or press release coming fromNovo Nordisk(NVO -0.09%). The Danish company struck gold not only with a cutting-edge diabetes drug in Ozempic, but also with an impressive weight loss treatment in Wegovy. Both drugs actually help people lose weight and are the catalysts for the company’s impressive revenue growth this year. But as Novo Nordisk has done, it still has room to achieve better results, as demand for these drugs is still in its early stages.

Novo Nordisk raises its forecasts for 2023

Earlier this month, Novo Nordisk raised its projections for this year as it experiences strong sales growth, with Ozempic and Wegovy being key enablers of its operations. Its new forecast indicates that at constant currencies, sales will increase between 32% and 38% for the year, which is higher than the previous range of 27% to 33%. Operating profit growth will also be in the range of 40% to 46%, a significant improvement from previous forecasts of 31% to 37%.

Over the first nine months of the year, the company’s sales overall increased by 33%. But the actual growth of Wegovy and Ozempic will likely be much higher than that. The company will publish its full and detailed results on November 2.

More Employers Plan to Cover GLP-1 Drugs

Even though demand for Novo Nordisk’s drugs is high, it could be even higher if people got coverage for these drugs. And there seems to be progress in this area. According to a recent survey of 500 mid-sized and large companies in the United States by market research firm Savanta, up to 40% plan to cover glucagon-like peptide 1 (GLP) drugs. -1) next year. Currently, only 25% offer coverage.

GLP-1 medications help lower blood sugar levels and may reduce appetite, leading to weight loss. Among the most popular drugs in this category are Wegovy and Ozempic. As interest in these medications increases, it is not surprising to see employers respond by suggesting that they will be more likely to offer their employees coverage for these treatments in the near future.

Novo Nordisk revenue could increase significantly

As more employers cover drugs such as Wegovy and Ozempic, this will ensure that demand remains strong for the foreseeable future. And as medications become more commonplace, this can potentially lead even more employers to follow suit.

But more broadly, the overall market for GLP-1 drugs is also growing, as consumers see how successful these drugs are in helping people lose weight. Analysts at JPMorgan Chaseproject that globally, the GLP-1 market could be worth $71 billion by 2032. Novo Nordisk and its rival Elie Lillywho also have a promising drug in Mounjaro, could each have a 45% share of the pie.

Novo Nordisk’s earnings and results have soared in recent years, and with increased demand for Wegovy and Ozempic, this trend will continue.

NVO Revenue (TTM) data by YCharts.

Should you buy Novo Nordisk shares?

Shares of Novo Nordisk are up 44% this year, and with so much room left for the company’s most promising drugs, it’s hard not to remain bullish on the health care stock for the long haul. term. At 46 times earnings, the stock doesn’t look cheap. But with earnings and earnings expected to rise significantly, the valuation is unlikely to fall much and the stock should not be perceived as overvalued. For long-term investors, Novo Nordisk remains a great buy.