One of the biggest narratives in the pharmaceutical space right now is that of weight-loss treatments.
Glucagon-like peptide 1 (GLP-1) agonists such as Ozempic and Wegovy are making significant headway among diabetes and obesity care patients. Both turned out to be blockbuster drugs , and are made by Danish pharmaceutical powerhouse Novo Nordisk (NYSE: NVO) .
Investors have cheered Novo as the company continues dominating the fast-growing GLP-1 market. But with shares of Novo Nordisk surging 57% over the last 12 months, you may be wondering if the train has left the station.
Let's dig into the full picture at Novo Nordisk and explore why now could still be a good time to scoop up shares.
How big is the market?
GLP-1 agonists aren't a panacea for weight loss. The primary function of these medications is to help diabetics and those suffering from obesity to normalize their blood sugar levels. Often, that leads to weight loss.
According to the International Diabetes Federation, there will be over 640 million people around the world living with diabetes by 2030, and more than 780 million by 2045.
Moreover, the World Health Organization (WHO) estimates that there are over 1 billion people worldwide living with obesity.
So Novo Nordisk clearly has an enormous and growing total addressable market . And Novo's management estimates that the company has amassed 70% market share for GLP-1's.
Image source: Getty Images
Why even better days could be ahead for Novo Nordisk
And investors have many reasons to believe that Novo still has a lot of potential for expansion.
After a medication receives approval from the Food and Drug Administration (FDA), pharmaceutical companies often continue spending time on additional research and use cases. If a drug can receive an expanded indication, its market expands.
Earlier this year, Wegovy was granted an expanded indication to treat obesity patients who are also at risk of cardiovascular disease. According to Statista, treatments for cardiovascular disease will be a $540 billion market by 2029.
This is a significant opportunity for Novo Nordisk, and the company moved quickly to capitalize on its entrance into the cardiovascular space by acquiring Cardior Pharmaceuticals back in March . This move complements Wegovy's expanded indication because Cardior is working through phase 2 trials for CDR132L -- a compound it hopes will get an FDA approval to treat heart disease.
Novo Nordisk notched another big win recently when Wegovy was approved in China . Chronic weight management is a huge market in China, and is expected to grow by $9 billion over the next five years alone, according to a China-based research and consulting firm.
While these trends suggest Novo Nordisk has significant upside, it's important to keep in mind that balancing supply and demand can be tricky. Novo has moved to mitigate supply logjams by acquiring manufacturing facilities from Catalent .
Is it too late to buy Novo Nordisk stock?
The chart below shows Novo Nordisk's price-to-earnings (P/E) ratio over the last five years. It's easy to see that Novo has experienced quite a bit of valuation expansion over the last several years.
NVO PE Ratio data by YCharts .
Shares are a bit pricey, but consider that Novo has little in the way of competition in the GLP-1 space . While many companies are looking to enter the weight-loss market, Eli Lilly is the only real competitor.
Moreover, considering the company has multiple billion-dollar opportunities for Wegovy alone, I think the company's growth prospects look robust. Furthermore, the diabetes, obesity care, and cardiovascular markets should continue growing over the next several years.
For these reasons, I do not think it's too late to buy Novo Nordisk stock right now. Long-term investors looking for some exposure to the pharmaceutical and drug manufacturing space might want to consider Novo Nordisk.
Adam Spatacco has positions in Eli Lilly and Novo Nordisk. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy .
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