Is Novo Nordisk set to become Europe’s first trillionaire company?

Denmark’s Novo Nordisk and its US rival Eli Lilly could become the world’s first trillion-dollar healthcare companies. So says Gemma Game, healthcare strategist at Norway’s sovereign wealth fund, the world’s largest.

Novo has a bit to go yet, but it’s more than halfway there, with Europe’s most valuable company last week exceeding a market value of $500 billion (€460bn) after reporting better-than-expected earnings. Like Lilly, Novo’s success is driven by soaring demand for its anti-obesity and diabetes drugs, Ozempic and Wegovy.

[ Dr Muiris Houston: Ozempic has big potential, but caution is necessary ]

Novo’s overall sales soared 36 per cent last year and growth of 18 to 26 per cent is expected for 2024. Investors are looking well beyond 2024, however. Strategist enthusiasm at Norway’s wealth fund, which owns 2.5 per cent of Novo, is focused on there being one billion obese people in the world, with “fewer than a fraction of 1 per cent” treated so far.

The counterargument is much of the growth is already priced in. Novo trades on 42 times trailing earnings, prompting UBS to recently caution that it struggles to “stretch the valuation further”. Still, shares have advanced nicely since then. For now, momentum remains with Novo’s bulls.

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