By Josh Nathan-KazisInvestors are fixated this fall on the threat that new obesity medicines pose to industries from snack foods to diabetes care, medical devices to gambling. Seemingly every couple of days, a Wall Street analyst or cable TV talking head claims the wave of weight loss drugs will the destroy the business model of some new sector. The periodic freakouts have hit shares of Coca-Cola (ticker: KO), down 10.4% this year, and medical device company Abbott Laboratories (ABT), down 13.4% this year. DexCom (DXCM), which makes a glucose monitoring system for people with diabetes, is down 17.5%, while ResMed (RMD), a maker of devices to treat sleep apnea, is down 28.2%. The CEO of Novo Nordisk (NVO), which makes two of the drugs motivating these fears -- weight loss shot Wegovy and Type 2 diabetes shot Ozempic -- says it's all gone a bit too far. "It seems like a bit of an overreaction, if you ask me," says Lars Fruergaard Jørgensen, speaking with Barron's on Thursday shortly after the company reported financial results showing that sales were up 33% at constant exchange rates so far this year, as compared with the first nine months of last year. Jørgensen, who has led the Danish company since 2017, is only the fifth CEO in Novo Nordisk's hundred-year history. The company's American depositary receipt has returned more than 520% since he took the reins, while the S&P 500 has returned a little over 110%. This past year, as Wegovy and Ozempic have erupted as cultural phenomena in the U.S., Novo's profile has expanded dramatically. Once known mostly as a manufacturer of insulin products, it is now among the most valuable healthcare companies in the world. "It also means that we are left, right, and center in terms of attention, which is completely new for us," Jørgensen said. "We're very humble about what we do. And we have a really, really long-term perspective." Jørgensen says that he doesn't think the new weight loss medicines, known as GLP-1 receptor agonists, will decimate the businesses of companies that treat patients with conditions related to obesity. "I've seen companies doing, say, dialysis services, sleep apnea, with massive share price reactions," he says. "These are progressive diseases. And even if you start reducing people with obesity, there are many who have a progressed state of disease." GLP-1 drugs, he says, are not a cure-all, and patients will still need other treatments. "It's not that if you lose weight, then suddenly you don't have kidney disease," he says. Still, Jørgensen says that his company's weight loss drugs do seem to change what people eat. "If you have had a talk with a patient who has been on Wegovy, and you have heard how that has changed the individual's eating habits, there's no doubt that patients who have been snacking throughout the day, they change behavior significantly," he says. "And some change to more healthy snacks. Some start consuming other products, they can start being more active." That suggests that the medicines could, theoretically, have an impact on U.S. snack food consumption at some point. For now, however, Wegovy supply remains constrained. In an investor presentation on Thursday, Novo said that it will continue to restrict the supply of starting doses of Wegovy, which will limit the number of patients who can go on the therapy, to ensure that enough medicine is available for people already on the drug. "Lowering starter doses is the right thing, and a responsible thing to do, from a patient point of view," Jørgensen told Barron's. Jørgensen said that supply of Wegovy will be constrained for a long time. "We are serving a fraction of that market today," he says. "It takes a significant ramp-up in manufacturing before you actually satisfy that demand." In the meantime, he is hopeful that insurers and employers will show increasing willingness to pay for the drug. "I think it's about to be established among payers that it's actually meaningful to put patients on GLP-1 because you reduce hospitalizations, you reduce some of these costs associated with comorbidities," he says. Novo's ADR was up 3.5% at midday on Thursday, and is up 49.4% this year. Write to Josh Nathan-Kazis at
[email protected] This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones NewswiresNovember 02, 2023 13:03 ET (17:03 GMT)(c) 2023 Dow Jones & Company, Inc.
(20min delay)