What a year for Novo Nordisk (NVO).

The Denmark-based company was the talk of the pharma and medical world — and the world of People magazine and E! with stars from Amy Schumer to Tesla CEO Elon Musk trying the firm’s diabetes and weight-loss medicines, Ozempic and Wegovy.

It is now the most valuable company in Europe with a market cap of some $445 billion, leapfrogging fashion giant LVMH — of Bulgari and Dior fame — in the second half of the year.

It even produced an earworm of a song for its commercials: “Oh, Oh, Oh, Ozempic,” a remake of the song “Magic” by the classic rock band Pilot. (Remember them? We didn’t think so.)

And, oh, what a year by the numbers for Novo, too.

Novo’s stock is up 45% so far this year compared with around 19% for the S&P 500 (^GSPC), according to Yahoo Finance data. The Health Care Index (XLV) is down nearly 3% year to date. (Meanwhile, competitor Eli Lilly (LLY) is up over 60% year to date.)

Sales in the US alone are up 45% this year, as of Sept. 30. The company reported nearly $12 billion in sales from Wegovy and Ozempic in the first nine months of the year, accounting for more than 50% of the $22 billion in revenue reported for its obesity and diabetes care segment in the same period.

The company’s profits? How’s this for underpromising and overdelivering: Novo has upgraded its guidance to Wall Street three times already this year. The company initially expected earnings growth of between 13%-19% in 2023 and has now set the bar at between 32%-38%.

“Novo … could be fairly credited with creating a weight-loss drug marketplace, kind of out of thin air, where there was none before — and one that now has multibillion-dollar potential,” said TD Cowen Securities analyst Michael Nedelcovych.

No wonder investors have fallen in love with the company. And no wonder we named Novo Nordisk Yahoo Finance’s 2023 Company of the Year.

But as CEO Lars Jørgensen will tell you, and as he conveyed to us in an exclusive interview, the company is “just scratching the surface.”

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“I’ve been with the company for more than 30 years,” he said from inside Novo’s sprawling headquarters in Bagsvaerd, Denmark (See video above). “I’m only the fifth CEO in a 100-year-old company, and now we’re growing around 30%, 100 years into our lifetime. And suddenly we have brands that are becoming household names.’

Jørgensen, who started at the company as an economist fresh out of university, added: “We’ve never ever had products that were widely known. So I think it causes some challenges on how to handle that but also drives a lot of opportunity.”

How Novo got here

How did Novo capture the cultural zeitgeist? How did a maker of insulin become an everyday brand in, seemingly, the blink of an eye?

The company’s origins date back to the 1920s (it just celebrated its 100-year-anniversary), when insulin was first discovered and August Krogh, a Danish professor, brought it to Denmark from Canada to help treat his wife, who had diabetes.

Krogh and other scientists subsequently formed Nordisk, helping make diabetes a manageable disease. Two former Nordisk employees then founded Novo, and the two competed until they merged in 1989 to create the insulin powerhouse known today as Novo Nordisk. The company, in an odd corporate structure, is controlled by the Novo Nordisk Foundation, which has a 25% stake. The foundation provides funding for research and development in various sectors, as well as other nonprofit endeavors in Denmark.

‘Behind a fortress of financial accolades is a company that behaves more like a foundation and takes their mission seriously,” said Columbia University professor and investor Meghan Fitzgerald.

That mission? This is from the company’s website: “Our purpose is to drive change to defeat diabetes and other serious diseases such as obesity and other serious chronic diseases.”

Insulin has been the company’s primary business for years and accounted for 79% of its sales of $25 billion in 2022. But its recent sales boom is linked to a fairly new class of drugs known as GLP-1s that signal to the body to produce more insulin and to slow digestion.

The drugs have actually been around for nearly two decades. The first ever GLP-1 for type 2 diabetes, Byetta from Eli Lilly, was approved in 2005. Since then, several companies have tried and failed to find a successful product for weight loss, and many dropped their research and development efforts about a decade ago.

Not Novo.

Novo’s first obesity product, Saxenda, was approved in 2014 but barely made a dent in the market, as it only provided 8% body fat loss.

“Despite [Saxenda] having kind of a lackluster commercial performance, they saw the opportunity and they went after it,” said TD Cowen’s Nedelcovych.

Three years later, the type 2 diabetes treatment drug Ozempic hit the market, followed by Wegovy in 2021. And Novo has struggled to keep up with demand.

‘We were telling them in meetings for years: You have something, finally, that works,” said Dr. Angela Fitch, founder of a weight-loss business based in Massachusetts called Knownwell.

Added Fitch, who is a paid speaker for Novo and president of the Obesity Medicine Association: “People [were] coming into my office saying, ‘Oh my God, it’s changed my life.’ We’d never heard that with the other medications we’ve been using.”

This past year produced a perfect storm of events, in a good way, for Novo in particular and the weight-loss/diabetes pharma business in general.

For one thing, catchy ads for drugs ranging from Jardiance, produced by Eli Lilly and Boehringer Ingelheim, to Ozempic have been everywhere — touting not only their effectiveness as type 2 diabetes treatments but also their ability to help with weight loss and even reduce the chances of a heart attack. (The ads go something like this: “I not only lowered my A1C but lost 16 pounds too!”)

The momentum kept on building. Soon, there were endless tales of celebrities — Sharon Osbourne and Tracy Morgan, to name a few — taking Wegovy and Ozempic and Lilly’s Mounjaro.

Then there were the endless tales of shortages and panicked diabetics getting shut out from their meds at CVS Health (CVS) stores and Walgreens (WBA). Adding to the frenzy was a study that showed that semaglutide, the active ingredient in Ozempic and Wegovy, helped cut the risk of heart attack, stroke, or death from cardiovascular disease by 20% among overweight or obese people with heart disease.

What’s next for Novo?

Despite all its good fortune, Novo does face challenges.

Even though Novo now controls 54% of the GLP-1 market, according to Novo’s latest earnings report, others are trying to get into the GLP-1 game — or are pivoting back after a years-long break. Recent announcements include Pfizer’s (PFE) oral candidate and Roche’s (RHBGY) pivot back by acquiring biotech Carmot.

“Other major biopharma manufacturers … must be debating at the board level how to potentially enter the obesity market,” Leerink Partners analysts wrote in a recent note to clients.

Said Novo CEO Jørgensen: “A lot of discussion was ongoing about … now there’s finally an efficacious treatment for people living with obesity, and then suddenly the whole market takes off. And that’s really fascinating but also comes with a lot of hard work because we have to scale up and ramp up manufacturing like we had never done before.”

And of course, there’s the not-so-small issue of insurers not covering the drugs for obesity. Ozempic and Wegovy, for instance, cost $963 and $1,349 per month, respectively.

The hefty price tag is essentially keeping scores of people from using the drugs.

What’s next for Novo?

For one thing, the company announced last month it planned on sinking a total of $6 billion in expanding its manufacturing capabilities in its home country — not only to satisfy the weight-loss drug boom but also to fulfill other treatments for other diseases in its pipeline.

For years Novo Nordisk has been a major player in the diabetes space, but the drug’s efficacy in weight loss, and potential to show positive impact in other disease areas like cardiovascular disease, could propel the company’s portfolio to be more diverse and valuable — something investors have been looking for for years.

In October, Novo dropped $1.3 billion to acquire a late-stage company with a hypertension drug, KBP Biosciences. There are several ongoing trials to also determine GLP-1 impacts on other diseases.

And Novo is eyeing some M&A deals for early-stage biotechs.

“We are right now looking for assets and acquiring and licensing assets in the cardiometabolic [obesity and diabetes] space. [Semaglutide’s success] creates a platform for us then to do non-organic deals and acquire innovation from outside and really complement and bolster our position in new therapeutic areas,” Jørgensen said.

Is the story of Novo only just beginning to unfold? Perhaps, pointed out Columbia University’s Fitzgerald. But there are way too many unknowns ahead to say that definitively.

“It’s hard to forecast the significant impact Novo’s semaglutide franchise will continue to have on the market, economy, and massive potential in public health,” she said. “[But] we are years away from an appropriate access and reimbursement model for the more than 750 million people worldwide living with obesity and the related morbidity and societal cost.”

Oh. Oh. Oh. Indeed.

Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. Follow Anjalee on all social media platforms @AnjKhem.

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