HomeMarket NewsNovo Nordisk Lagging Behind as Viatris Challenges Wegovy Patents

Novo Nordisk Lagging Behind as Viatris Challenges Wegovy Patents

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Novo Nordisk office in Fremont, California, USA

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Novo Nordisk (NVO), one of Europeโ€™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 Nordiskโ€™s GLP-1 receptor agonists, Wegovy and Ozempic, have been major contributors to the companyโ€™s success in recent years. In fact, these drugs helped Novo Nordisk briefly become Europeโ€™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 Nordiskโ€™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 Nordiskโ€™s exclusivity with semaglutide. However, analysts at Barclays remain confident in Novo Nordiskโ€™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 companyโ€™s remedial measures have addressed the FDAโ€™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 Viatrisโ€™ objections to the patentsโ€™ structure are weak. Furthermore, Jefferies does not anticipate any generic threats to Novo Nordiskโ€™s weight-loss drugs or those of competitor Eli Lilly (LLY) within this decade.

Conclusion

While Novo Nordisk may be facing some challenges in the form of a patent dispute and manufacturing concerns, analysts remain optimistic about the companyโ€™s future. The outcome of the patent challenge from Viatris will have a significant impact on Novo Nordiskโ€™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.

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