NOVO NORDISK? YES-VO NORDISK! TIME TO BUY NVO!
"An obesity treatment" to become one of the mega trend sectors in 2026
- A diagnosis of the current U.S. economy
Currently, experts are arguing over whether the U.S. economy is in recession or not.
Some argue that interest rates should be cut in preparation for a recession due to signs of employment insecurity, while on the other hand, others argue for raising or freezing interest rates because inflation is not stablizing due to impact of tariff policy.
The Fed's two objectives, employment and inflation, are in fact difficult to co-exist.
If employment is active, the economy will improve and prices will rise, and on the contrary, if employment slows down, consumer capacity will decrease, slowing inflation.
In any case, it is clear that the Fed cannot neglect both employment and inflation.
However, since the Trump administration took office, the Fed's calculation method has become quite complicated. This is because the variable of tariffs has not yet resolved.
Currently, most countries have a semi-voluntary tariff agreement with the United States, but if the Supreme Court puts a brake on the president's authority to adjust tariffs, this tariff issue could again become a variable and disrupt the market.
In other words, the recent tariff problem is that most of the uncertainties have been sorted out, but there still remains a very small uncertainty of embers.
In any case, many recent articles in the United States have confirmed that tariffs are working and have some effect on prices.
- So what about employment?
The view varies on perspectives, but majority agree that "there is no employment nor layoff."
Because companies do not hire, turnover is not active and there is a clear tendency to stay in the workplace.
However, it is not a situation where mass layoff occurs.
Prevailing opinion is that the recent reduction of big tech is not a matter of stagnation, but rather that development of AI has led to reducing the need for more manpower compared to past, in terms of cost-effectiveness.
In other words, employment is currently NEUTRAL.
- An additional point to consider is not the price but the consumption perspective.
“K-shaped consumption” is a word that is frequently used in the US media recently. The high-income and capitalist classes do not reduce consumption, but the consumption of the lower-income classes decreases day by day.
In other words, polarization is getting worse.
In summary, it is true that tariffs have affected overall price and inflation, but high-income groups still can maintain and increase consumption regardless, whereas low-income vulnerable groups are directly hit by tariffs. In other words, there may be cracks in employment centered on low-income groups.
Because of this situation, the Fed's Powell keeps saying that he still needs to see more data on interest rates before affirming anything.
Recently, stock market has fluctuated considerably due to unsettling direction of interest rates in December. However, what we need to think about now is WHAT WILL HAPPEN NEXT YEAR.
On December, it’s quite likely that Fed will cut interest rates, but even if that doesn’t happen and thus market drop, it should be used as an opportunity to actively buy, not fear.
The Fed cannot ignore this phenomenon because the card delinquency rate of low-income families continues to increase. Believe Fed will move preemptively to prevent a small problem from spreading into a big one.
The bottom line is that next year, interest rate cut is inevitable in long term. So I think it is reasonable to prepare for an investment strategy next year with interest rates continuing to fall
The biggest beneficiaries in this case would be "Bio," "Anti-cancer drugs," "Anti-obesity drugs," and "AI bio" sector.
It is known fact by many that usually the bio sector benefits the most by interest rate cuts. This is because firms in this sector cannot make money right away, but they invest astronomical money on R&D, so it is greatly affected by the interest rates that can raise funds.
There are also numerous sub-sectors in the bio-industry, but I think the sector to pay attention to next year is AI bio, which has just begun to bloom, with traditional strong anticancer drugs and obesity treatments that will grow explosively.
Among them, let's focus on obesity treatment for now.
Obesity drugs have already shown a tremendous rise as a mega trend once from the end of 2022 to the first half of 2024.
Novo Nordisk, which developed a single GLP-1 semaglutide, commonly known as Wegovy, is the company that opened the door to this trend.
Originally, a drug developed as a treatment for diabetes has been confirmed to help lose weight, and it has quickly become a star bio company.
Of course, Novo Nordisk has ceded its throne to Eli Lilly's Mounjaro(the tirzepatide of GLP-1 and GIP combination), that has turned out to be more “effective” in weight loss. But even more reason why it’s the right time to buy.
The rationale can be found in the remarks of Mike, who recently took over as CEO of Novo Nordisk.
The plan is to release Wegovy's oral version of product (pill) next year and establish a mass production system to eliminate any supply bottlenecks experienced in the early stages of the launch of the Wegovy injection drug.
At the same time, the Trump administration's drug price cut and the expansion of Medicaid (health insurance) coverage for obesity treatments create the effect of greatly increasing the pie in the obesity treatment market.
Till now, the biggest problem with obesity treatments has been the high price. Obesity drugs must be continuously injected, but there was a limit to the market's growth due to the high price.
This change may reduce immediate sales in short term, but in the long run, the market for obesity treatment will grow, creating an environment where people can enjoy enormous benefits.
In particular, oral products have many advantages in administration and distribution compared to injection-type products, so they can be supplied to the market in large quantities at low prices, which has the effect of bringing market pie not only in high-income countries but also in developing countries.
This is why oral obesity treatments are called "game changers" of obesity treatments in the market.
Negative news have been all reflected on stock now
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Novo Nordisk's stock price has gone down disastrously recently.
While the stock price of its rival Eli Lilly is at a new high, Novo Nordisk's growth rate this year is negative. Compared to its peak, the stock price has been cut in quarter.
The main reason is the market's assessment that Mounjaro is better than Wegovy. As a result, the market capitalization gap between the two companies is almost seven times different.
Paradoxically, however, this difference would be a great opportunity to buy Novo Nordisk.
Intuitively, comparing the gap between Eli Lilly and Novo Nordisk, two companies that divide the obesity treatment market, and the difference in the obesity treatment market share shows that Novo Nordisk's decline is way too much.
Eli Lilly's market share is conservatively 40%, and Novo Nordisk's is conservatively 30%. It doesn't make sense that a mere 10% difference makes such a gap in market capitalization.
This indicates that Novo Nordisk has already entered an undervalued phase.
In addition, the benefits of rising stock prices are much greater than the risk of falling stock prices at a time when there are a series of favorable factors waiting for the obesity treatment market that will grow next year, the launch of oral treatments, and the clinical trial of new obesity treatments (component name: amylin).
So when should I buy and when should I sell?
This is the most important question in the stock market. The key point is, as everyone knows, "You buy it when it's inexpensive and you sell it when it's expensive."
As mentioned earlier, it can be partially agreed that Novo Nordisk has entered the low point section now.
So you can buy this stock whenever you have money. It seems that at least the $70 range can be seen as a attractive range.
Because if you fast forward time to next year or the year after, the stock price will go over $150.
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