Ozempic: The World’s Most Famous Drug

Ozempic is arguably the world’s most famous drug. It is a diabetes treatment that has proven to be a sensational weight-loss cure, and recent studies suggest we may just be touching the tip of the iceberg. On October 10, the kidney dialysis providers Fresenius and DaVita saw their stocks decline by almost 20% when Novo Nordisk A/S, the producer of Ozempic, announced that Ozempic’s effectiveness against kidney disease was so conclusive that it was stopping a trial early.

Ozempic was first approved and sold by Novo Nordisk as a treatment for Type 2 diabetes in 2017. In 2021, they launched a higher-dose version specifically for obesity called Wegovy. Mounjaro, Eli Lilly’s drug in this class, was introduced in 2022. From 2020 to 2023, this class of drugs (GLP-1) saw prescriptions quadruple.

Note:  Glucagon-like peptide-1 (GLP-1) is a hormone that stimulates insulin secretion after eating, enabling a feeling of fullness and regulating blood sugar. GLP-1 agonists mimic the effects of this hormone, making them an effective treatment for diabetes and obesity.

The glucagon-like peptide-1 receptor (GLP1R) is a receptor protein found on beta cells of the pancreas and neurons of the brain. It is involved in the control of blood sugar levels by enhancing insulin secretion.

Novo Nordisk has sales approaching $30 billion, of which Ozempic accounted for $8.5 billion and Wegovy $880 million. Combined, these two drugs are almost one-third of Novo Nordisk’s sales. Mounjaro, Eli Lilly’s entry into this field had sales of $480mm or about 1.5% of Eli Lilly’s sales.

Recent studies have suggested other far-reaching benefits of Ozempic and other medicines in the same class, known as GLP-1 receptors. The drugs have a protective effect on the heart, liver, and kidneys, as well as helping people lose weight, reducing the risk of many medical conditions. There are reports from the National Institute on Alcohol Abuse and Alcoholism (NIAAA) and the National Institute on Drug Abuse (NIDA) that suggest these drugs may also work in addictive disorders, such as drinking and smoking.

According to Daniel Drucker, a University of Toronto professor who helped discover how the drugs work, this class of drugs may make cells healthier by reducing inflammation and improving their function. According to Bloomberg Businessweek, that is one reason scientists think GLP-1 drugs might help treat Alzheimer’s or Parkinson’s diseases, which cost the US healthcare system even more than cardiovascular disease. Alzheimer’s disease is sometimes called type 3 diabetes because insulin resistance is known to be a contributing factor. A review article published in 2022 in Frontiers in Endocrinology posits that drugs that target GLP-1 to treat type 2 diabetes (T2D) could potentially treat Alzheimer’s as well.

According to sources that include the Michael J. Fox Foundation, the Center for Disease Control and Prevention, and the American Heart Association, the US spending on treatments for conditions for which GLP-1 drugs may prove helpful include the following:

Alzheimer’s and Parkinson’s disease       $356 billion

Cardiovascular disease                               $251 billion

Diabetes                                                        $237 billion

Obesity-related medical care                    $173 billion

Kidney Disease                                             $125 billion

Substance Abuse                                           $35  billion

With all this growth potential, the stocks in the GLP-1 arena have been big movers and demand the investment community’s attention. The risks include the extended valuations of these stocks, supply constraints, new competition, and pressures on future pricing from regulators, particularly in the US. Thermo Fisher (TM0) has gotten into the mix as a new supplier of Ozempic as Novo Nordisk is committed to accelerating supply growth, and we continue to look for other opportunities in this arena that are not holding a premium valuation.