Weight-loss drugs have been soaring in popularity over the past few years. People have even been using a drug like Ozempic, although it's only approved for diabetes, simply because it helps them lose weight. In just the last three months of 2022, there were over 9 million prescriptions issued in the U.S. for weight-loss drugs. In less than three years, the number of prescriptions has soared by 300%.
People have been rushing out to use weight-loss drugs -- and shares of Novo Nordisk (NVO 0.84%), the company which makes Ozempic, have also jumped over 150% in three years. But there could be one big risk with Ozempic and other, similar drugs, and that's the side effects.
Reports of concerning side effects
In Canada, at the University of British Columbia, researchers concluded in an epidemiological study that Ozempic -- along with other GLP-1 receptor agonists that aim to subdue a person's appetite -- may lead to increased risk of stomach paralysis. This means that the flow of food in the body stops, which can cause continual vomiting. There have also been media reports of a higher risk of bowel obstruction with these drugs.
Other potential side effects have been possibly linked to GLP-1 drugs, including suicidal thoughts. In Europe, regulators are also concerned about whether they may increase the risk of thyroid cancer.
Of course, it's important to remember that these medications have passed rigorous regulatory approval. Yet, these drugs are still in their relatively early growth stages; it can be difficult to know for certain what the long-term side effects may be -- and whether that might potentially deter people from using them in the future.
While clinical studies often include thousands of people, many more people take approved drugs once they reach the market. And at a larger scale, more outlier symptoms and side effects could arise that may not have been identified as risks in clinical trials.
Another risk for Novo Nordisk
A separate risk for Novo Nordisk is simply the potential competition ahead. Depending on how its products stack up against other drugs and weight-loss treatments, that could drastically affect their growth potential. People will naturally want to take the drugs that achieve the highest rate of weight loss.
Pharmaceutical competitor Eli Lilly is working on getting Mounjaro, a treatment for diabetes, approved as a weight-loss drug; in clinical trials, it has shown that it can help people lose even more weight than Wegovy and Ozempic. Pfizer has also been working on danuglipron, a weight-loss pill which has achieved comparable results to Ozempic, although at a much higher dosage.
Wegovy and Ozempic accounted for half of Novo Nordisk's revenue through the first half of this year. That percentage is likely to rise as the drugs continue to grow in popularity and as the company rolls out Wegovy to more markets. The success of both the company and the stock may inevitably be linked to the success of these two drugs.
Should you buy Novo Nordisk shares?
Reports of potential side effects involving GLP-1 drugs are concerning, but as of now shouldn't derail Novo Nordisk's growth prospects. Since there's been a huge jump in prescriptions, with millions being issued in the U.S. alone, if there was a huge immediate issue with these drugs, it would likely be well-known by now.
Many people are desperate for effective weight-loss options, and it is a reality that most drugs come with side effects. For now, this isn't a huge risk for Novo Nordisk, but it is one that investors should keep an eye on as more data comes out. Overall, Novo Nordisk is still a terrific growth-oriented company to invest in. It could continue to generate great returns in the long run.
