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Fortune
Fortune
Vivienne Walt

Novo Nordisk developed Ozempic and started a weight-loss revolution. Its next moonshot is eliminating obesity altogether

Diabetes drug Ozempic (Credit: Ryan David Brown—The New York Times/Redux)

The blue syringe pens zipping along the factory assembly line pass by in a blur; it’s only when the machine briefly slows that their labels come into focus: Ozempic. Almost identical white pens, labeled Wegovy, move down a nearby production line. Both look unremarkable. But to the factory owners—Denmark’s $351 billion drugmaker Novo Nordisk—the Type 2 diabetes and obesity drugs might as well be made from spun gold.

Tucked amid farmland 26 miles north of Copenhagen, in Hillerød, a town better known for its 400-year-old castle, Novo Nordisk’s pharmaceutical factory is a world apart from the celeb-fueled weight-loss craze its output has spawned in the U.S.—Hollywood, in particular. At the Academy Awards ceremony in Los Angeles in March, host Jimmy Kimmel gazed out at the audience of glittering movie stars and evoked howls of laughter by saying, “Everybody looks so great. When I look around the room, I can’t help but wonder, ‘Is Ozempic right for me?’ ”

For millions of people, the answer to that question has apparently been a resounding yes. No one at the Oscars even needed to ask what Ozempic is; it’s the one-word shorthand for what many see as Big Pharma’s fiercest contest in years—diet drugs—as readily understandable as Kleenex is for facial tissue.

Read more: The end of dieting: WeightWatchers and Noom are now pushing Ozempic-like miracle drugs over willpower

The Food and Drug Administration approved Ozempic in 2017 as a treatment for Type 2 diabetes. Four years later, the agency gave the green light to Novo’s similar drug Wegovy to treat obesity, the first weight-loss drug to win FDA approval in eight years. Wegovy sparked a frenzy among dieters, ramped up by social media influencers and figures like Elon Musk who touted their new pharma-cut bodies to millions of followers. Shortages of Wegovy followed, leading doctors to prescribe Ozempic as an off-label alternative. Off-label use triggered a separate shortage of Ozempic among Type 2 diabetics, who need the drug for its true FDA-approved purpose.

Scarcity fueled Ozempic’s buzz and helped define it as a drug reserved for A-listers. And at $1,000 or so for a month’s supply, so did its out-of-pocket price. There was good reason for the hype. Studies show that Ozempic and Wegovy result in patients losing up to 15% of their body weight, a threshold researchers long thought was humanly impossible. 

The Wegovy boom “happened very, very fast,” says chief financial officer Karsten Munk Knudsen, who joined Novo 20 years ago. “In the U.S., the uptake surpassed anything we’ve ever seen before, not just by a few percent, but by severalfold.”

Even skeptics and cautious financial analysts have found it hard to capture the impact of Novo’s new drugs. “It’s a complete game changer,” says Deutsche Bank Research analyst Emmanuel Papadakis. Novo sales rose 25% in the first three months of 2023, year on year; it predicts full-year operating profit growth of 28% to 34%. 

Celebrities and social media influencers fueled Ozempic and Wegovy’s early buzz. Both drugs feature a lab-made hormone called semaglutide that tricks the body into thinking it’s full.

The impact, however, extends far beyond one company, to the sprawling global weight-loss business, which pharma executives and scientists have long considered a potential gold mine. Analysts say the market could rocket in size, as drug companies begin rolling out new treatments and millions of people seek them out. “Like most analysts, our estimates are struggling to keep pace with the demand curve,” Papadakis says. But as pharma companies rush to develop Ozempic rivals, a few questions have emerged: How far will firms go to change people’s metabolism, and how should they weigh the ethics of doing so? And are the new weight-loss solutions better at sustaining lower body weight long term than those of the past?

Novo, the leader in the field, is at the sharp end of this dilemma. It justified bringing Wegovy to market by treating obesity as a chronic, life-threatening disease rather than the self-inflicted, stigma-inducing result of unhealthy habits. Novo could ride the Ozempic and Wegovy wave to untold riches, but the problem of obesity is so enormous—affecting some 1 billion people globally—that it can’t be prescribed away. What’s more, there’s growing concern about the drugs’ side effects, including reports of suicidal thoughts among some Ozempic and Wegovy patients, which prompted the European Union to open an investigation into the drugs in July.

Novo says that in the end, truly ridding the world of obesity, with its dire medical consequences, will require it to pull off its next moonshot: preventing patients from becoming obese in the first place.

Given a century of work on diabetes, perhaps it was inevitable that Novo would finally create a groundbreaking weight-loss drug—although it took decades for it to do so.

The company was founded in 1923 by Danish physician August Krogh, a Nobel Prize winner for medicine, and his physician wife Marie. They brought home the production techniques for insulin from Canada, where the diabetes treatment had just been invented, and began making it near Copenhagen in a frantic—and ultimately successful—effort to save Marie, who suffered from diabetes.

In 1924, the company launched what would become known as the Novo Nordisk Foundation to honor the early lives its drugs saved. Today, its $100-billion-plus endowment makes it the world’s biggest private charitable organization. It holds 28.2% of shares in the pharmaceutical group, with 75% of votes. Knudsen says that structure lets Novo take a long-term perspective: “We are not to the same extent slaves to the next quarterly earnings as perhaps some other companies are.”

chart shows Novo Nordisk revenues since 2010

Until Ozempic hit the market, Novo was best known for its diabetes treatment; it produces nearly 50% of the world’s insulin. (Ultrahigh insulin prices in the U.S. have led to heated criticism of Novo and its competitors. Novo said in March it will cut the U.S. list prices of some insulin pens starting Jan. 1.) Far different from other pharma companies, Novo narrowly focuses its research and development on diabetes and obesity, and some rare diseases. Today, nearly all of Novo’s development is done in-house.

In 1986, through years of work on stomach ulcers, a Danish scientist, along with others at Harvard Medical School and the University of Toronto, discovered the hormone glucagon-like peptide-1, GLP-1, which governs a person’s appetite. From that, Novo developed semaglutide, the lab-made imitation of GLP-1 and the key component in Ozempic and Wegovy, to which it holds the patent in the U.S. until 2032. Semaglutide is inserted into injectable pens that patients jab into themselves weekly. (In May, Novo said oral semaglutide tablets were proving as effective in tests.) The medication tricks the body into feeling full, even after consuming a small amount of food, and lasts longer than the natural hormone, slowing the passage of food through the digestive system.

Almost as soon as Novo innovated semaglutide medications, it was evident that the new drugs would potentially result in dramatic weight loss. Novo’s first-generation obesity drug Saxenda, made from a different GLP-1 analog, was not a big hit initially. That may be because weight loss averaged at best 6% of body weight. Scientists had hit that limit many times before. “We were asking people, ‘If you could lose weight with pharmacotherapy, what would make you really happy?’ And they would say 15%, 20%, 25%,” notes chief scientific officer Marcus Schindler. “In the scientific community, that didn’t resonate. Every time we tried something, we got stuck somewhere at 5%, 6%, 7%.” Scientists thought patients could only lose 10% or so before their bodies would begin to hoard fat and reverse the effects.

Novo chief scientific officer Marcus Schindler says Wegovy’s differentiator is that patients lose up to 15% of their body weight, besting what researchers long thought was possible.

But when diabetics began taking the semaglutide drug Ozempic, that barrier was broken. Early trials showed Ozempic and Wegovy patients losing 15% of their body weight.

Even so, Novo was wary of using diabetes drugs explicitly for weight loss. The strategy was debated within the company. Knudsen says execs were haunted by rivals’ past failed attempts to capture the diet-drug market. The drugs fen-phen and Acomplia were both found, in the 1990s and 2000s, respectively, to cause dangerous side effects like cancer and cardiac disease and were pulled from sale. “Obesity had very big potential, but we were looking at a market with a lot of failures in history,” Knudsen says.

But diabetes, Novo’s speciality, was increasingly intertwined with obesity, which is believed to be a major cause of the disease. About 80% of diabetics are obese. So as obesity rates soared this century, Novo circled ever closer to addressing it.

The turning point came amid the COVID-19 pandemic, which underscored obesity as a medical risk. The U.S. Centers for Disease Control estimated that obese people were three times as likely to be hospitalized for COVID as others. To Novo, that was a call to action. The pandemic began just two years after the FDA approved Ozempic for Type 2 diabetes, and Wegovy was approved for obesity at the height of the crisis. “For severe cases [of COVID], there was a much higher prevalence of people living with obesity,” Knudsen says. “It heightened the importance and interest in how to deal with obesity.”

Up on the airy top floor of Novo’s headquarters north of Copenhagen—a spherical, skylit building designed to resemble an insulin molecule—company execs admit they are still somewhat stunned by the seismic impact of Ozempic. They say they were caught badly off guard by what occurred when they released Wegovy in the U.S. in June 2022. It was “unlike anything we have ever seen,” says Knudsen at his standing desk, a sweeping view of the Danish countryside behind him.

In the pharmaceutical industry, worth an estimated $1.4 trillion, annual growth rates typically hover around 3% or 4%. But Novo was suddenly forecasting sales increases of nearly 30% on the back of Wegovy and Ozempic—and meeting them.

With chronic shortages of Ozempic in the U.K., Ireland, Australia, and elsewhere, Novo is now racing to catch up. (Cranes and bulldozers in Hillerød work furiously, part of Novo’s $3.6 billion manufacturing ramp-up.) But even for patients able to find supplies of Novo’s drugs and a doctor to prescribe them, paying for them is still difficult. So far, most insurance companies don’t cover Wegovy or the off-label use of Ozempic. 

Having helped inspire a diet-drug revolution, Novo is now battling to keep its pole position as larger rivals race to match its success. Pfizer is seeking FDA approval of a weight-loss tablet called danuglipron, which it claims can result in up to 10 pounds lost over 16 weeks

In the first quarter of 2023, Indianapolis-based Eli Lilly sold about $568 million worth of Mounjaro, an Ozempic-like injectable approved by the FDA in May 2022 to treat Type 2 diabetes. The FDA is expected to approve Mounjaro for weight loss later this year. In tests, an oral version of Mounjaro has reduced body weight by more than 25%, beating by a wide margin Ozempic and Wegovy, and, for that matter, every weight-loss medication ever sold.

“We think of this market as a duopoly,” says Emily Field, equity analyst at Barclays Investment Bank in London. “Novo and Lilly are the winners, and everyone else is tripping over themselves to try and catch up.” 

Schindler, Novo’s chief scientist, says the firm’s weight-loss breakthrough has helped redefine obesity. More people now consider it a chronic medical condition causing widespread suffering instead of the self-inflicted result of bad habits. “We moved the needle,” he says. “Obesity was seen as a personal lifestyle. Now it is a treatable disease, and that is a game changer.”

Some Ozempic patients are more cautious. “People are starting to view it as a chronic disease, but you still see the stigma,” says Brooke Boyarsky Pratt, founder and CEO of Knownwell, an obesity medical center in Needham, Mass., that launched in January. Having suffered from obesity her whole life, Pratt says she lost 80 pounds on Ozempic and Wegovy over the past year. Her staff prescribes the drugs along with dietary advice and stress monitoring. “We’ve been inundated with patients referred by physicians,” she says.

Yet there is growing unease over patients’ scramble to take the medications, as well as with aggressive third-party marketing campaigns that portray the drugs as a cure-all for obesity and a solution for those who are simply overweight.

In June, telehealth company Ro yanked a Wegovy ad campaign in New York City’s subways after health professionals criticized it for skirting the health risks and casting the jabs as a quick fix for obesity. (Ro said it pulled the ads because Novo couldn’t meet the high demand for Wegovy.)

Weeks earlier, the World Health Organization’s nutrition director Francesco Branca told reporters that obese people were being led to believe that Ozempic and Wegovy were all they needed to achieve a healthy weight, instead of seeing medication as part of a holistic approach involving good diet and exercise. “The kind of communication that has been done around these drugs, ‘We’ve found a solution,’ that’s wrong,” he said. “This is not a silver bullet.”

“We think of this market as a duopoly. Novo and Lilly are the winners, and everyone else is tripping over themselves to try and catch up.”

Emily Field, equity analyst, Barclays Investment Bank

In Denmark, Novo execs are already thinking about how to innovate beyond Ozempic and Wegovy. Despite their massive popularity as diet drugs, Ozempic and Wegovy were never intended for use as ongoing weight-loss aids. Schindler says scientists don’t yet know what happens if people take them long-term. “We simply don’t have enough data yet in what will happen in the body. Will it remodel?” he says. “It is way too early to say.”

Ozempic and Wegovy are also subject to the harsh reality of any dieting method: Generally, patients regain weight if they stop their regimen.

In June, top Novo execs formed an in-house “transformational obesity prevention unit” that they believe could define the company’s future. The idea is “to start to understand what are the questions we need to ask,” Schindler says. “There are particular biological systems that kick in earlier, before you actually have full-blown obesity. We’re starting to ask, ‘What if we could stop those processes from happening?’ ”

It could take years for the company to pull that off. Schindler believes stopping people from becoming obese to begin with, rather than treating them after the fact, might in fact require an industrywide effort.

If Novo and its peers succeed, the commercial and medical potential could be enormous, addressing a worsening obesity epidemic that has been linked to rising rates of cardiac disease and some cancers. WHO estimates that there are more than 1 billion obese people globally; in the U.S., that includes more than 40% of adults and more than 19% of children, according to the National Institutes of Health.

Novo execs say drugs like Ozempic and Wegovy can’t overcome a crisis of that magnitude. “This is a big population,” says Novo executive vice president for commercial strategy Camilla Sylvest, who heads the new prevention unit with Schindler. “Many health care systems might have a challenge covering all these people living with obesity.”

Sylvest believes the industry’s focus should be prevention, not creating ever more effective diet drugs. “We need to be looking at what’s the next thing we can do, prevent this happening to more people,” she says. “Over time, if we do not invent new and better ways of doing that, we might end up becoming part of the problem.”

This article appears in the August/September 2023 issue of Fortune with the headline, “Novo Nordisk takes on the weight of the world.”

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