Clinical trial data has shown that Novo Nordisk’s Wegovy treatment offers more advantages than just addressing obesity, according to analysts at Citi. It was previously discovered that Wegovy reduced the likelihood of heart attacks, strokes, and cardiovascular fatalities by 20%. This led to the conclusion that the drug induces weight loss, resulting in a secondary benefit of reduced cardiovascular risk.

However, recent data from a five-year study indicates that the drug may directly impact cardiovascular outcomes, even before any weight loss has occurred, particularly in individuals without diabetes. The significant positive effects on major adverse cardiovascular events became evident soon after initiating the treatment, as stated by the company. This suggests that the advantages of semaglutide, the active ingredient in Wegovy and Novo’s anti-diabetic drug Ozempic, cannot be fully explained by weight loss alone.

Novo Nordisk’s stock experienced a 2.3% increase in early European trading, further solidifying its position as Europe’s largest company by market capitalization, surpassing luxury fashion conglomerate LVMH. Additionally, Novo Nordisk’s American depositary receipts rose by 1.3% in premarket trading. Eli Lilly, whose weight-loss treatment Zepbound recently obtained approval in the U.S. and U.K., witnessed a 0.4% increase in shares prior to the market opening.

Weight-Loss Drugs Show Promise as Paradigm Shift in Treatment

Citi and J.P. Morgan Analysts Optimistic about the Market Potential

Analysts at Citi have expressed their optimism about the outlook for weight-loss drugs following the data presented at the American Heart Association’s annual scientific meeting in Philadelphia. According to the analysts, the datasets were met with great enthusiasm, with discussions highlighting a significant change in treatment practices. They specifically noted that the younger patients and those with lower BMI ranges experienced the greatest benefits.

Additionally, Citi analysts have given the stock a Buy rating with a target price of 815 Danish kroner, suggesting a 15% increase from the current price.

J.P. Morgan analysts are equally bullish on the shares, rating them as Overweight. They emphasized the overall positive impact of Wegovy treatment on various outcomes, particularly on reducing all-cause mortality. This favorable outcome is expected to drive higher adoption rates among payers and physicians for obesity treatments, specifically Novo’s Wegovy.

Moreover, J.P. Morgan analysts highlighted that this data has reinforced their belief in a paradigm shift in obesity treatment, which could result in a potential market worth $71 billion by 2032.

In terms of market share, they anticipate that Novo and Eli Lilly will dominate around 90% of this market.

It is clear that weight-loss drugs are poised to bring significant changes to the landscape of obesity treatment, providing hope for better outcomes and paving the way for substantial market growth in the coming years.

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