In Response To 'Surprise' Growth In Obesity And Diabetes Drugs, Credit Suisse Upgrades Novo Nordisk

It cited growth in Novo Nordisk's obesity and diabetes drugs as a reason for upgrading it to outperform on Thursday, according to Credit Suisse.

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After dealing with supply issues for a while, a weight-loss drug called Wegovy is now experiencing a successful relaunch, while the diabetes drug Ozempic has seen accelerated growth rather than a slowdown as a result of the relaunch of Wegovy, said analyst Dominic Lunn.

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There has been a significant surprise in the repeat prescription trends for both Ozempic and Wegovy YTD, and they have performed significantly better than we expected.

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The success that both drugs have achieved in weight loss as well as their endorsements by celebrities and social media influencers have pushed both drugs into the spotlight. Wegovy, on the other hand, is the only weight loss medication that has been approved by the Food and Drug Administration for weight loss. Ozempic is also approved to treat diabetes, although it is being used off-label for weight loss. There are several differences between these two medications. One medication is semaglutide, while the other is a higher dose.

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In the past year, there was a shortage of Wegovy, which caused some patients to switch to Ozempic as a result of the shortage. The fact that Wegovy is back in supply has led Credit Suisse to anticipate that Ozempic's growth could be slowing down now that Wegovy is back in supply. Rather than increasing the number of patients taking Wegovy, Dunn explained that Ozempic is still experiencing growth despite a rise in new patients taking Wegovy.

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“Considering the latest trends, we believe Novo's 2023 estimates will be significantly higher than the projected growth guidance of the company currently, as well as consensus expectations for 2023, even though we understand the expectations of the buy-side are already well ahead of the publish-side projections."

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In the U.S., only 22% of diabetes patients take glucagon-like peptide-1 drugs, including Ozempic, which is a member of that class.

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As a result of the re-supply of Wegovy for Obesity, the Ozempic growth has accelerated despite the new supply of the drug. Novo sees growth from penetration in diabetes rather than off-label obesity usage.

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While Eli Lilly's Mounjaro has shown better weight loss results than Wegovy when it comes to weight loss, Mounjaro is still only approved for the treatment of diabetes unlike Wegovy, for which Credit Suisse has increased its sales forecast by over 100% due to this drug's rapid growth since its relaunching a year ago.

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Dunn wrote that Wegovy will continue to lead the obesity market expansion thanks to its first-mover advantage and high efficacy response.

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During midday trading, Novo Nordisk's shares rose about 1.5% on the New York Stock Exchange.