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Norway wealth fund says Novo, Eli Lilly might be part of trillion-dollar membership

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A pharmacist shows containers of Ozempic, a semaglutide injection drug used for treating kind 2 diabetes made by Novo Nordisk, at Rock Canyon Pharmacy in Provo, Utah, U.S. March 29, 2023. 

George Frey | Reuters

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Norway’s big wealth fund, the world’s largest, touted the chance that Danish drugmaker Novo Nordisk and U.S. rival Eli Lilly might be on target to turn into the primary healthcare members of the trillion-dollar membership.

The feedback come as the 2 firms are seen as the first beneficiaries of skyrocketing demand for diabetes and weight reduction medication.

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Novo Nordisk, Europe’s largest agency by market capitalization, on Wednesday reported stronger-than-anticipated 2023 earnings, as gross sales of its massively fashionable drug Wegovy continued to soar. The agency’s market valuation surpassed $500 billion on the information.

The biggest pharmaceutical firm on the earth by market worth, Eli Lilly at present stands at roughly $612 billion.

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Gemma Sport, head of well being care sector technique at Norges Financial institution Funding Administration (NBIM), said Tuesday that the launch of secure and efficient weight reduction medication final yr had helped to make Novo Nordisk and Eli Lilly family names.

The model names of particular person medicines, similar to Novo Nordisk’s Ozempic and Wegovy, and Eli Lilly’s Zepbound, have turn into acquainted to many.

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“The story is way from over,” Sport stated. “For the billion [of] individuals dwelling with weight problems world wide right this moment, that is actually thrilling. Fewer than a fraction of 1% have been handled up to now. So, we’re early on within the launch trajectory.”

NBIM, the world’s biggest single stock market investor, holds a 2.5% stake in Novo Nordisk and a 0.98% stake in Eli Lilly, based on LSEG knowledge.

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Eli Lilly and Firm, Pharmaceutical firm headquarters in Alcobendas, Madrid, Spain.

Cristina Arias | Cowl | Getty Photos

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Weight problems, which has vital well being implications, is linked to round 200 totally different medical situations.

NBIM’s Sport stated she can be intently monitoring knowledge on whether or not the anti-obesity medication referred to as GLP-1 agonists might additionally successfully deal with persistent kidney illness, obstructive sleep apnea and Alzheimer’s illness.

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“We have simply heard concerning the ‘Magnificent Seven,’” Sport stated throughout a information convention, referring to a bunch of mega-cap U.S. tech shares. “Maybe sooner or later we’ll be speaking about Eli Lilly and Novo Nordisk because the world’s first trillion-dollar well being care firms.”

U.S. tech giants together with Microsoft, Apple and Amazon are all valued at over $1 trillion by market capitalization, whereas Meta‘s market worth recently surpassed the milestone for the primary time since 2021.

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Barclays said final yr that it expects the worldwide weight reduction drug market to develop to about $100 billion by the tip of the last decade.

“If something, we really feel extra assured about these forecasts,” Emily Discipline, head of European pharma fairness analysis at Barclays, instructed CNBC’s “Worldwide Change” on Jan. 8.

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Key to pharma stocks is current their supply ramp, says Barclays' Emily Field

“What Novo was in a position to firmly set up final summer season, and we noticed extra knowledge within the fall, was that not solely do you drop some pounds, however it will possibly have a significant profit in your cardiovascular well being,” she added.

“And this yr, we need to see updates on all these different areas of the place losing a few pounds can result in different advantages, similar to in kidney illness and in addition probably liver illness.”

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