Novo Nordisk (NYSE:NVO) comes charging after global fitness industry as Oprah rides Wegovy bull

Danish pharmaceutical company Novo Nordisk (NYSE:NVO) has since its founding in 1923 used a logo of a bull styled after the ancient Egyptian deity Apis. It’s a fitting symbol for a company that’s now charging through the global weight loss and fitness industries as dieters and gym rats ditch workouts for its drugs.

Novo Nordisk is the maker of semaglutide, a medication used to treat type 2 diabetes that was also approved for chronic weight management in 2021 under the brand name Wegovy. The US Food and Drug Administration said at the time that 70% of Americans were overweight.

The treatment, which works by mimicking a hormone that targets the regulation of appetite and food intake, is effective, and people who took the drug in a clinical trial lost an average of 12.4% of their initial body weight compared to those who received a placebo. It’s also expensive, with the once-a-week injection costing $16,188.24 a year, and people need to keep taking the medicine or they tend to gain the weight back.

Novo Nordisk’s market capitalization has more than tripled since Wegovy was first approved for weight loss, and the company has seen continued momentum, especially with news that a daily pill under development could be even more effective. Shares are up almost 30% this year, and the firm is now the 11th most valuable in the world ahead of big names including Visa (NYSE:V), Tesla (NASDAQ:TSLA) and Walmart (NYSE:WMT). 

But one company’s golden egg is devastating the multi-billion dollar weight loss and fitness industry as frustrated dieters show their clear preference for the expensive shot over sweating it out at the gym or counting calories. It appears now you can really have that cake, and eat it too. The casualties are everywhere, with shares in fitness companies Peloton (NASDAQ:PTON), Planet Fitness (NYSE:PLNT) and Nautilus all plummeting over the past year.

The company formerly known as WeightWatchers has also seen large declines, just not the kind it wanted. Longtime weight loss influencer Oprah Winfrey, who last year said she was using one of the new medicines, is leaving the board of the company and planning to talk about the drugs in an upcoming ABC primetime special later this month. 

The coming shift in weight management is creating winners and losers all around, and investors will want to stay attuned to the coming shift. Will Lululemon Athletica (NASDAQ:LULU), the athletic apparel retailer, become the next company to struggle? Maybe. But Maybe not. The company has long faced accusations that it’s not friendly toward plus-size shoppers, and a trimmer populace might actually mean that more people can fit into its clothes. The trend could also boost consumption stocks like restaurants and beverage companies as people eat and drink guilt free. 

Novo Nordisk will also be under pressure, as drug companies are only as valuable as their next hit. The company will lose patent protections around semaglutide by 2032, when it will begin to face competition from generics. It could also face regulatory scrutiny and pricing pressure, as some critics argue only the wealthy can currently afford it. As Novo Nordisk navigates the future of weight management with its treatments, the evolving landscape of fitness, diet, and pharmaceuticals will be shaking up companies for years to come.