Novo Nordisk has been one of the top-performing pharmaceutical stocks over the past half-decade thanks to breakout sales of its diabetes and obesity medications. An investment of $10,000 five years ago would be worth around $45,450 today given Novo’s impressive share price appreciation.
On February 1st, 2019, Novo Nordisk traded around 194 Danish krone per share. Converting to US dollars using the exchange rate at the time, the share price was roughly $24. Fast forward to January 30th, 2024, and Novo closed at $109.02 per share on the New York Stock Exchange.
That equates to a gain of around 348.46% over the five year stretch. Turning $10,000 into Novo Nordisk shares in early 2019 would have netted you around 417 shares. That same position would now be worth approximately $45,450 excluding dividends.
Driving Novo’s Share Price Performance
What has fueled such a meteoric rise in Novo Nordisk’s share price? The main driver has been surging sales growth of its glucagon-like peptide-1 based medications for diabetes and obesity.
Sales in Novo’s diabetes and obesity care division have expanded at a compound annual growth rate of 25% in local currencies over the past five years. In 2022 alone, sales in the unit grew 34% year-over-year.
Major contributors included the diabetes drug Ozempic and the anti-obesity injection Wegovy. Ozempic saw sales more than triple between 2019 and 2022. Wegovy has grown at an even faster clip since launching in 2021, with 2022 sales up 154% year-over-year.
Strong volume growth combined with price increases have allowed Novo Nordisk to significantly expand revenue and profit. Operating profit rose at a five-year CAGR of 18% in local currencies.
Additional Factors Supporting Novo’s Valuation
Beyond stellar financial results, Novo Nordisk’s valuation has been supported by:
- Massive investments to expand production capacity amid surging demand
- Dominant market share in diabetes care
- Fast-growing obesity market with huge untapped potential
- Strong clinical trial results reinforcing competitive advantages
- Increased dividend payouts and share repurchases
- High barriers to entry for competitors
While supply constraints have periodically restricted sales, Novo is investing 75 billion kroner by 2027 to boost capacity. With obesity affecting 650 million adults globally, the addressable market for Wegovy and Ozempic is enormous.
Novo’s promising pipeline and industry-leading margins provide confidence it can sustain rapid growth. The company has firmly established itself as a pharmaceutical growth juggernaut.
Novo Nordisk has been a growth stock superstar in recent years as sales of its diabetes and obesity drugs continue skyrocketing. While past performance doesn’t guarantee future returns, the company appears to have strong tailwinds supporting many more years of expansion.
$10,000 invested in Novo five years ago would now be worth about $45,450. With the prevalence of metabolic disorders increasing globally, Novo looks poised to continue delivering market-beating returns for investors going forward.