The weight-loss drug with huge growth potential

Short Briefings on Long Term Thinking - Baillie Gifford

A new medicine that can help patients lose 15 per cent of their body weight could have far-reaching consequences for healthcare. Wegovy mimics a hormone the gut releases, reducing appetite and slowing digestion to delay hunger’s return. Research is also underway into other potential health benefits.

In this podcast, Baillie Gifford investment manager Ross Mathison discusses its maker, the Danish pharmaceuticals manufacturer Novo Nordisk, which became Europe’s most valuable company in 2023.

Background:

Ross Mathison is an investment manager in our Global Income Growth Team, co-manager of our Global Income Growth Fund and deputy manager of the Scottish American Investment Company (SAINTS).

In this episode of Short Briefings on Long Term Thinking, he discusses how medicines that mimic the glucagon-like peptide-1 (GLP-1) hormone could help tackle the growing problem of weight gain. Forecasts suggest that by 2035, more than half the world’s population will either be overweight or obese. That’s likely to lead to more people suffering associated diseases, putting health budgets under further strain.

Novo Nordisk initially researched GLP-1s as a diabetes treatment. The company is the world’s biggest insulin producer, but it’s the release of its weight-loss drug Wegovy that’s transformed its growth prospects. News that medical trials suggest that the therapy could also reduce the likelihood of heart attacks, strokes and other cardiovascular threats among some patients has driven further investor interest.

Mathison explains that there could be further health benefits beyond this, how even more effective treatments could follow and why Novo Nordisk’s manufacturing edge and connection to the world’s biggest charitable foundation bode well for its future.

Resources:

New England Journal of Medicine: Semaglutide trial

Novo Nordisk cardiovascular trial press release

Novo Nordisk kidney trial press release

Novo Nordisk Foundation

Wegovy

World Health Organization obesity factsheet

Hitting Against the Spin

Timecodes:

00:00 Introduction

1:40 What are GLP-1s?

4:00 Scientific breakthrough

5:05 Obesity: a disease, not a choice

6:45 Novo Nordisk’s drug, Wegovy

08:10 Prescription costs