Norway wealth fund says Novo, Eli Lilly may join trillion-dollar club

Norway’s giant wealth fund, the world’s largest, touted the likelihood that Danish drugmaker Novo Nordisk and U.S. rival Eli Lilly may very well be on target to change into the primary health-care members of the trillion-dollar club.

The comments come because the two firms are seen as the first beneficiaries of skyrocketing demand for diabetes and weight reduction drugs.

Novo Nordisk, Europe’s largest firm by market capitalization, on Wednesday reported stronger-than-expected 2023 earnings, as sales of its hugely popular drug Wegovy continued to soar. The corporate’s market valuation surpassed $500 billion on the news.

The biggest pharmaceutical company on this planet by market value, Eli Lilly currently stands at roughly $612 billion.

Gemma Game, head of healthcare sector strategy at Norges Bank Investment Management, said Tuesday that the launch of protected and effective weight reduction drugs last 12 months had helped to make Novo Nordisk and Eli Lilly household names.

The brand names of individual medicines, corresponding to Novo Nordisk’s Ozempic and Wegovy, and Eli Lilly’s Zepbound, have change into familiar to many.

“The story is removed from over,” Game said. “For the billion [of] people living with obesity around the globe today, this is absolutely exciting. Fewer than a fraction of 1% have been treated thus far. So, we’re early on within the launch trajectory.”

NBIM, the world’s biggest single stock market investor, holds a 2.5% stake in Novo Nordisk and a 0.98% stake in Eli Lilly, in accordance with LSEG data.

Obesity, which has significant health implications, is linked to around 200 different medical conditions.

NBIM’s Game said she can be closely monitoring data on whether the anti-obesity drugs often known as GLP-1 agonists could also effectively treat chronic kidney disease, obstructive sleep apnea and Alzheimer’s disease.

“We have just heard concerning the ‘Magnificent Seven,'” Game said during a news conference, referring to a bunch of mega-cap U.S. tech stocks. “Perhaps in the longer term we’ll be talking about Eli Lilly and Novo Nordisk because the world’s first trillion-dollar health-care firms.”

U.S. tech giants including Microsoft, Apple and Amazon are all valued at greater than $1 trillion by market capitalization, while Meta’s market value recently surpassed the milestone for the primary time since 2021.

Barclays said last 12 months that it expects the worldwide weight reduction drug market to grow to about $100 billion by the tip of the last decade.

“If anything, we feel more confident about those forecasts,” Emily Field, head of European pharma equity research at Barclays, told CNBC’s “Worldwide Exchange” on Jan. 8.

“What Novo was in a position to firmly establish last summer, and we saw more data in the autumn, was that not only do you shed some pounds, but it might have a significant profit in your cardiovascular health,” she added.

“And this 12 months, we want to see updates on all these other areas of where shedding pounds can result in other advantages, corresponding to in kidney disease and in addition potentially liver disease.”