(Bloomberg) — Novo Nordisk A/S became the second European company ever to pass $500 billion in market value, buoyed by a positive outlook for its blockbuster obesity drug.
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Novo surpassed the milestone on Wednesday when its shares rose as much as 4.1%, hitting a level that only Dior owner LVMH could reach.
The Danish pharmaceutical company has surged past the luxury goods giant and into the spotlight when its anti-obesity drug Wegovy and a sister anti-diabetes drug, Ozempic, proved they could help people lose unwanted weight by curbing their appetite.
The company’s earnings provided new optimism as the drugmaker said sales could grow by as much as 26% this year and operating profit by 29% at constant exchange rates. According to Bloomberg Intelligence analyst Michael Shah, the guidelines appear conservative.
The drugmaker has struggled to keep up with demand for both Wegovy and Ozempic, which share the same active ingredient. On Wednesday, it said it has more than doubled the number of Wegovy starter doses it is shipping to the US, allowing more people to receive the treatment.
The company announced $8.7 billion in investments last year to increase its production capacity.
Whether that translates into long-term sales will depend on two factors: competition from Eli Lilly & Co.’s Zepbound, which was introduced late last year, and how long people are willing to keep taking the drug.
Novo’s shares are up 60% in the past year, fueled by the obesity frenzy. They rose as much as 4.1% in Copenhagen trading on Wednesday. The returns contrast with those of Swiss drugmaker Novartis AG, whose shares fell on concerns about its growth prospects.