Last year wasn't great for Novo Nordisk (NVO 2.09%). One of the biggest challenges it faced was losing ground in the all-important weight loss market to its biggest competitor, Eli Lilly.
However, Novo Nordisk has a plan to get things back on track, and the company's oral Wegovy is part of that strategy. In December, Novo Nordisk earned approval for the oral version of its famous medicine, which it launched earlier this month. And so far, things are looking very encouraging for this new product.
Should investors buy Novo Nordisk's shares given these developments?
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How strong is oral Wegovy's launch?
Oral Wegovy won't simply cannibalize sales of the original version of the medicine, at least that's the hope. Novo Nordisk is aiming to expand its addressable market and target patients who simply do not want to inject themselves. Besides those who are scared of needles, oral Wegovy is also an excellent option for patients who have trouble maintaining the cold storage requirements of the subcutaneous version of Wegovy.
And then there is the price. People without insurance coverage will be more attracted to the lower (out-of-pocket) cost of the oral pill. Novo Nordisk's strategy seems to be working wonders so far. According to some estimates, oral Wegovy's prescription volume in the first two weeks after its launch was higher than that of the original Wegovy and Eli Lilly's Zepbound (the current market leader) at the same stage after their launch.
Of course, that doesn't mean Novo Nordisk will keep up this pace. But things look encouraging.
Is Novo Nordisk stock a buy?
How much will oral Wegovy contribute to Novo Nordisk's sales? Even at a higher prescription volume, given its lower cost, it likely won't match the sales of injectable weight-loss therapies. Further, Eli Lilly should launch its own oral GLP-1 medicine later this year.
NYSE: NVO
Key Data Points
Even with these caveats, oral Wegovy could hit peak sales of about $3.3 billion, according to some projections -- a meaningful number that will help Novo Nordisk's sales growth in the long run. Meanwhile, the Denmark-based pharmaceutical giant should launch at least a couple more weight-loss medicines over the next two years. It has requested approval for CagriSema, a product that outperformed Wegovy in a phase 3 clinical trial.
It is running late-stage clinical trials for Amycretin, a next-gen weight-loss medicine. Novo Nordisk also has plenty of candidates in early-stage development. Even with strong competition from Eli Lilly and other drugmakers looking to break into this market, Novo Nordisk has a strong product lineup and a deep pipeline that should support solid revenue and earnings growth for the foreseeable future. The stock is still down massively over the past two years, and at current levels, it is worth seriously considering picking up its shares on the dip.
