What Is a Blockbuster Drug?

Identifying a company with a blockbuster drug in the pipeline can seem like the holy grail if you're a healthcare investor. A blockbuster drug is one that generates at least $1 billion in annual revenue. While blockbuster drugs often fuel profits for pharmaceutical companies, the big bucks usually fade once the drug's patent expires.

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Pills lying on dollar bills. — Image source: Getty Images.

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Only about 12% of drugs that make it to clinical trials ultimately get FDA approval. As a result, drug companies often lean heavily on the sale of blockbuster drugs to offset the costs of research and development for drugs that never make it to market.

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Novo Nordisk (NVO -0.13%), the Danish company that created the drugs, reported that Ozempic had sales of almost $9.4 billion during the first nine months of 2023, while Wegovy brought in about $3.1 billion in revenue for the same period.

The drugs' blockbuster sales have made Novo Nordisk the most valuable company in Europe -- a title previously held by French luxury conglomerate LVMH Moët Hennessy (OTCMKTS:LVMUY) -- with a market capitalization of more than $430 billion in late 2023.

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About the Author

Robin Hartill, CFP, is a contributing writer at The Motley Fool. Robin’s work has also been published by Yahoo Finance, USA Today, and Penny Hoarder. She is a graduate of the University of Florida.

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Robin Hartill has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie and Pfizer. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.