Norway wealth fund says Novo, Eli Lilly may join trillion-dollar club

Norway’s giant wealth fund, the world’s largest, touted the possibility that Danish drugmaker Novo Nordisk and U.S. rival Eli Lilly could be on course to become the first healthcare members of the trillion-dollar club.

The comments come as the two companies are seen as the primary beneficiaries of skyrocketing demand for diabetes and weight loss drugs.

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

The largest pharmaceutical company in the world by market value, Eli Lilly currently stands at roughly $612 billion.

Gemma Game, head of health care sector strategy at Norges Bank Investment Management (NBIM), said Tuesday that the launch of safe and effective weight loss drugs last year had helped to make Novo Nordisk and Eli Lilly household names.

The brand names of individual medicines, such as Novo Nordisk’s Ozempic and Wegovy, and Eli Lilly’s Zepbound, have become familiar to many.

“The story is far from over,” Game said. “For the billion [of] people living with obesity around the world today, this is really exciting. Fewer than a fraction of 1% have been treated so far. So, we’re early on in 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, according to LSEG data.

Obesity, which has significant health implications, is linked to around 200 different medical conditions.

NBIM’s Game said she would be closely monitoring data on whether the anti-obesity drugs known as GLP-1 agonists could also effectively treat chronic kidney disease, obstructive sleep apnea and Alzheimer’s disease.

“We’ve just heard about the ‘Magnificent Seven,'” Game said during a news conference, referring to a group of mega-cap U.S. tech stocks. “Perhaps in the future we’ll be talking about Eli Lilly and Novo Nordisk as the world’s first trillion-dollar health care companies.”

U.S. tech giants including Microsoft, Apple and Amazon are all valued at over $1 trillion by market capitalization, while Meta‘s market value recently surpassed the milestone for the first time since 2021.

Barclays said last year that it expects the global weight loss drug market to grow to about $100 billion by the end of the decade.

“If anything, we feel more confident about those forecasts,” Emily Field, head of European pharma equity research at Barclays, told CNBC’s “Worldwide Exchange” on Jan. 8.

“What Novo was able to firmly establish last summer, and we saw more data in the fall, was that not only do you lose weight, but it can have a major benefit on your cardiovascular health,” she added.

“And this year, we are looking to see updates on all these other areas of where losing weight can lead to other benefits, such as in kidney disease and also potentially liver disease.”