Is weight loss medication surpassing luxury brand bags? Novo Nordisk is catching up with LVMH, reaching the top in Europe?

Is the throne of Europe's most valuable company about to change hands?

On Tuesday, August 8th, Novo Nordisk released the results of Phase 3 trials for its "miracle weight-loss drug" semaglutide, claiming that it reduces the risk of heart disease and stroke by 20%. As a result, the potential market for semaglutide has significantly increased.

The already hot semaglutide has once again ignited the market frenzy, causing Novo Nordisk's stock price to soar by 17%, reaching a peak increase of over 19% during trading, marking the largest intraday gain in history. The company's market value has surpassed $423.6 billion, approaching the market value of luxury goods giant LVMH, which is $442 billion.

Will semaglutide become even more popular?

On August 8th local time, Novo Nordisk announced the results of the SELECT clinical Phase 3 trial for semaglutide.

The analysis shows that the trial has achieved its primary endpoint. Subcutaneous injection of 2.4 mg semaglutide once a week can reduce the risk of major adverse cardiovascular events in overweight or obese adults by 20% (patients without a history of diabetes). Novo Nordisk expects to apply for regulatory approval for semaglutide's expanded label indications in the United States and the European Union this year.

In the SELECT cardiovascular outcomes trial (a randomized, double-blind, parallel-group, placebo-controlled trial), Novo Nordisk recruited 17,604 adults aged 45 or older who were overweight or obese, had cardiovascular disease (CVD), and had no history of diabetes. The trial lasted for 5 years, and the conclusion was finally reached that the risk was reduced by 20% compared to the placebo.

Analysis by Wall Street News points out that although many studies have shown a correlation between obesity and various cardiovascular diseases, semaglutide is the first drug clinically proven to reduce the risk of cardiovascular disease as a weight-loss drug.

According to Professor Hertzel Gerstein, Deputy Director of the Population Health Research Institute (PHRI) in Canada, the positive results of this trial mainly mean two things: first, patient groups like those in the trial should receive GLP-1 targeted therapy such as semaglutide in addition to other cardiac protective treatments. One is that the known cardioprotective effect of targeting GLP-1 is not limited to diabetic patients.**

This result has far-reaching implications for Novo Nordisk, not only expanding the scope of drug applications. More importantly, it may affect the scope of reimbursement by US health insurance, which is of great significance to Novo Nordisk's revenue.

According to a new survey by KFF, approximately 45% of surveyed US adults expressed interest in taking "safe and effective weight loss drugs". However, without insurance coverage, only 16% of adults are still interested in taking weight loss drugs.

And Wegovy is a completely self-funded product in the US market. Without insurance, the annual cost of using Wegovy could exceed $16,000.

This means that the issue of whether health insurance reimburses for weight loss drugs is a constraint for 29% of potential weight loss consumers in the United States.

Now that Novo Nordisk's semaglutide has clinical results beneficial for reducing cardiovascular risk, it may further accelerate the inclusion of weight loss indications in the US health insurance reimbursement list. The sales ceiling for semaglutide will be raised again.

Are weight loss drugs more popular than luxury handbags?

Weight loss drugs vs. luxury goods, which is currently favored by the market?

Novo Nordisk, a Danish pharmaceutical company specializing in diabetes care, has attracted market attention in the past three years with a series of products, including Wegovy (the weight loss version of semaglutide), which has swept Europe and the United States. Since the end of 2020, Novo Nordisk's stock price has doubled, surpassing European giants such as Nestle and Roche, ranking second in market value in Europe.

Wall Street News previously mentioned that since last year, the trend sparked by semaglutide has caused a rush to buy among weight loss enthusiasts, and soon the product was out of stock.

The exaggerated demand for weight loss drugs has caused shortages of Novo Nordisk's weight loss version of semaglutide (Wegovy) and diabetes version (Ozempic), and genuine diabetes patients have had to revert from one injection per day to one injection per week. Shortages have even spread to the previous generation GLP-1 product liraglutide (Saxenda), a medication vital for diabetes patients, which has been snatched up by people looking to lose weight, resulting in a state of "unavailability".

According to the latest drug shortage list from the FDA, the supply of liraglutide (Saxenda) will be limited until the end of 2023 due to surging demand. The problem of drug shortages for diabetes patients will become increasingly severe.

A research report from Morgan Stanley shows that by 2030, the global weight loss drug market could reach $77 billion, more than $20 billion higher than the bank's initial forecast.

However, for the luxury goods industry, the outlook for current demand is filled with uncertainty, with a series of luxury brands, from the global luxury leader LVMH to Prada in Italy, showing signs of sales growth slowdown in key markets.

In the first half of the year, LVMH's sales increased by 17% to reach 42.2 billion euros, with second-quarter revenue of 21.21 billion euros, surpassing analysts' expectations. However, sales in the US market for the quarter contracted by 1% compared to the same period last year, an unusual negative growth that has raised concerns and dissatisfaction among investors.

LVMH CFO Jean-Jacques Guiony stated that global consumer sentiment this year is not as strong as in 2021 and 2022, repeatedly pointing out that the market is returning to normal. He also emphasized that the situation in the US market is not as good as before.