Can Denmark's leading pharmaceutical company maintain its lead?

For a brief period, Novo Nordisk, the Danish pharmaceutical business, emerged as the most valuable corporation in Europe towards the end of the previous year.

Though not very well-known outside of the business community, Novo Nordisk was not previously seen as a major force in the pharmaceutical sector, much less a titan of the European stock market.

However, because it had found the most valuable of all medications, it shot to the top of the league table and was valued at $428 billion (£342 billion). One that, throughout the Western World and beyond, millions of people desire and need.

Wegovy's key component was created to treat type 2 diabetes, but it also very certainly caused weight loss in some as a side effect.

Similar to how Viagra was first intended to treat high blood pressure, Wegovy's unintended but well-known adverse effects have turned it into a needed medication.

It is coming to an open door, as a Goldman Sachs study indicates that the market for anti-obesity medications will be valued at around $6 billion this year. However, it may increase to $100 billion—more than 16 times—by 2030.

It seems almost too exciting to be true, but what are the possibilities and long-term implications for a pharmaceutical business that finds a sure thing that works?

The process of finding a medicine that unexpectedly becomes popular is just the beginning. It needs to be created, and marketed, and the pricing has to be negotiated with several health insurance providers and government health agencies.

Some, like the UK's National Health Service (NHS), are so big that they may drive down the price and, thus, the profit margin of even the most well-known medications.

Wegovy is now offered by the NHS for weight control under certain conditions.

Next, there are issues with operations. Novo Nordisk struggled in 2022 to supply the enormous demand for Wegovy. Due to concerns regarding its capacity to reproduce the medicine in sufficient quantities and at a high enough standard to appease industry regulators, its shares were devalued in December 2023.

The business acknowledges that it ran out of the 1.7 mg dosage of Wegovy in the US in December. Despite operating its production lines "24 hours a day, seven days a week," it nevertheless occurred.

However, it anticipates being able to begin shipping again this month.

The creator of a massively popular new medication then faces one more issue. It helps you stand out from the competition, which exposes you to whether your business is small or even medium-sized. Being popular does not always pay off.

Large pharmaceutical companies have enormous financial resources, so if their costly and comprehensive drug research programmes haven't been successful in finding the greatest treatments, there's an easy fix: acquire the business that has.

However, a Danish Foundation owns the majority of its shares, thereby protecting it from takeover attempts.

(Sources: bbc.co.uk)