Novo Nordisk (NVO), one of Europe’s leading pharmaceutical companies, has been struggling to perform in recent weeks due to an ongoing patent dispute with Viatris (NASDAQ:VTRS) over their popular weight-loss therapy, Wegovy.
The Impact of Wegovy on Novo Nordisk
Novo Nordisk’s GLP-1 receptor agonists, Wegovy and Ozempic, have been major contributors to the company’s success in recent years. In fact, these drugs helped Novo Nordisk briefly become Europe’s most valuable publicly traded company. However, their position was quickly reclaimed by luxury retailer LVMH (OTCPK:LVMHF) (OTCPK:LVMUY). In 2022 alone, sales of Wegovy and Ozempic brought in $9.4B for Novo Nordisk, showing a staggering 88% YoY growth.
The Recent Underperformance
Despite their market success, Novo Nordisk’s shares have been under pressure compared to their larger pharmaceutical counterparts. Barlcays has attributed this underperformance to a manufacturing overhang and the ongoing patent battle with Viatris, who has challenged the validity of three semaglutide (the active ingredient in Wegovy) patents in an Inter Partes Review (IPR).
The U.S. Patent and Trademark Office (USPTO) is expected to make a decision regarding the validity of the patents in question as early as this week. If the patents are deemed invalid, it could potentially impact Novo Nordisk’s exclusivity with semaglutide. However, analysts at Barclays remain confident in Novo Nordisk’s patent thicket for semaglutide, which they believe extends through 2032.
Additional Concerns and Analyst Perspectives
In addition to the patent dispute, Novo Nordisk faced concerns over a potential bacterial contamination at one of their semaglutide production sites in North Carolina. However, Barclays analysts do not view this issue as a serious concern at this stage and believe that the company’s remedial measures have addressed the FDA’s worries.
Jefferies analysts have also weighed in on the situation, stating that if the USPTO institutes the Inter Partes Review, it could lead to a period of uncertainty that lasts for approximately 12 months. They believe that Viatris’ objections to the patents’ structure are weak. Furthermore, Jefferies does not anticipate any generic threats to Novo Nordisk’s weight-loss drugs or those of competitor Eli Lilly (LLY) within this decade.
While Novo Nordisk may be facing some challenges in the form of a patent dispute and manufacturing concerns, analysts remain optimistic about the company’s future. The outcome of the patent challenge from Viatris will have a significant impact on Novo Nordisk’s success with semaglutide. However, with multiple patents in place that extend beyond 2032, Novo Nordisk maintains strong potential for continued growth in the weight-loss therapy market.
Disclaimer: This article is for informational purposes only and should not be considered as investment advice. Please consult with a financial advisor before making any investment decisions.