A pharmacist displays boxes of Ozempic, an injectable semaglutide drug used to treat type 2 diabetes manufactured by Novo Nordisk, at Rock Canyon Pharmacy in Provo, Utah, U.S., on March 29, 2023.
George Frey | Reuters
Norway's giant wealth fund, the world's largest, trumpeted the possibility that Danish drugmaker Novo Nordisk and its American rival Eli Lilly They could be on their way to becoming the healthcare sector's first members of the trillion-dollar club.
The comments come as the two companies are seen as the main beneficiaries of the growing demand for diabetes and weight loss drugs.
Novo Nordisk, Europe's largest company by market capitalization, on Wednesday reported better-than-expected 2023 earnings as sales of its popular drug Wegovy continued to rise. The company's market valuation surpassed $500 billion following the news.
Eli Lilly, the world's largest pharmaceutical company by market value, is currently worth approximately $612 billion.
Gemma Game, head of healthcare strategy at Norges Bank Investment Management, said on Tuesday that the launch of safe and effective weight-loss drugs last year had helped make Novo Nordisk and Eli Lilly household names.
Individual drug brands, such as Novo Nordisk's Ozempic and Wegovy and Eli Lilly's Zepbound, have become familiar to many.
“The story is far from over,” Game said. “For the billion [of] For people living with obesity around the world today, this is really exciting. Less than a fraction of 1% has been treated so far. “So, we are in the early stages of the launch trajectory.”
NBIM, the world's largest stock market investor, owns a 2.5% stake in Novo Nordisk and a 0.98% stake in Eli Lilly, according to LSEG data.
Eli Lilly and Company, headquarters of the pharmaceutical company in Alcobendas, Madrid, Spain.
Cristina Arias | Cover | fake images
Obesity, which has major health implications, is linked to around 200 different medical conditions.
NBIM's Game said he would be closely monitoring data on whether anti-obesity drugs known as GLP-1 agonists could also effectively treat chronic kidney disease, obstructive sleep apnea and Alzheimer's disease.
“We just heard about the 'Magnificent Seven,'” Game said during a news conference, referring to a group of large-cap U.S. technology stocks. “Maybe in the future we will talk about Eli Lilly and Novo Nordisk as the world's first trillion-dollar healthcare companies.”
American tech giants, including microsoft, Apple and Amazon All are valued at over $1 trillion by market cap, while Meta's market value recently surpassed the milestone for the first time since 2021.
Barclays said last year that it expects the global weight-loss drug market to grow to about $100 billion by the end of the decade.
“If anything, we feel more confident about those forecasts,” Emily Field, head of European pharmaceutical equity research at Barclays, told CNBC's “Worldwide Exchange” program on Jan. 8.
“What Novo was able to firmly establish last summer, and we saw more data in the fall, was that not only does it lose weight, but it can also have a significant benefit for cardiovascular health,” he added.
“And this year, we expect to see updates on all of these other areas where losing weight may have other benefits, such as in kidney disease and also potentially in liver disease.”
