Novo Nordisk (NYSE:NVO)(DE:NOVC) initiated legal proceedings against certain spas and wellness clinics. The pharmaceutical company accused them of illegally promoting and selling counterfeit drugs, claiming that they included semaglutide, the key ingredient of its popular obesity and diabetes drugs – Wegovy and Ozempic.
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The company warned that the compounded products purporting to contain semaglutide may not have the safety, quality, and effectiveness of its FDA-approved drugs. This poses a risk to patients’ well-being.
It’s worth noting that Novo Nordisk is the only company in the United States with FDA-approved drugs containing semaglutide. Further, there is no generic version of semaglutide available in the market that has FDA approval.
Novo Nordisk’s obesity drug Wegovy witnessed stellar demand soon after its launch in the U.S., driving the company’s sales and share price. However, the company is struggling to keep up with the demand.
While it is focusing on expanding the production capacity, the company disclosed that the launch of Wegovy in certain European markets has been slower than anticipated. This delay is attributed to the continued high demand for Wegovy in the United States.
Wegovy and Ozempic to Drive Future Sales
Novo Nordisk started 2023 on a solid note, and the momentum is likely to sustain throughout the year on the back of an acceleration in sales for its diabetes and obesity drug. The company expects its 2023 sales to increase by 24% to 30% on a constant currency basis.
Notably, NVO stock has risen about 55% over the past year, which has driven its valuation higher. While NVO stock is trading at a premium compared to its peers, Luisa Hector of Berenberg Bank believes that the premium is warranted given the “significant growth opportunity the obesity market promises.”
Will Novo Nordisk Stock Go Up?
Novo Nordisk stock has marked decent gains over the past year, which is why the upside in its stock price appears limited based on analysts’ average price target.
It has received nine Buy, two Hold, and two Sell recommendations for a Moderate Buy consensus rating on TipRanks. Analysts’ average price target of €155.13 implies 4.28% upside potential from current levels.
