NOVO is a great play at this price

I wanted to share my thesis on Novo Nordisk (NVO) about why its a great investment at this price. I’m not a financial expert—just a long-term investor sharing my perspective.

First of all, many people seems to be freaking out about the recent price cuts, but I actually think they could be very beneficial in the long run. The obesity market is enormous, and Wegovy—or whatever succeeds it—could remain a strong product even after patent expiration thanks to Novo's scale, manufacturing capabilities, and pricing power.

As prices come down, there will be less incentive for compounding pharmacies and copycat manufacturers to enter the market. Given Novo's production scale, competitors may struggle to achieve attractive returns while matching Novo's pricing and maintaining acceptable margins. In other words, Novo could establish itself as the low-cost, trusted standard and effectively price out a large portion of the competition.

After all, if you have the option to buy a well-known brand with a proven track record for only a few dollars more than an unknown alternative with questionable manufacturing standards, which one are you going to choose?

As obesity treatments become high-volume, lower-margin products, they could generate stable and recurring cash flows that support future innovation. This would provide Novo with a reliable earnings base and a degree of insulation from the inherent volatility of the biopharmaceutical industry.

Another point worth mentioning is Europe. The EU has a much stricter regulatory environment than the United States, and Wegovy is only beginning to realize its full potential here. As for Foundayo, approval may not be a question of when, but rather if.

Looking further ahead, UBT251 and several other pipeline candidates appear very promising. They could eventually take a meaningful share of the obesity market and challenge Eli Lilly's current dominance. In the meantime, Novo still has several important growth drivers, including oral Wegovy and potentially an oral version of CagriSema.

The increasing use of AI in drug discovery could also accelerate development timelines across the industry or increase the scale of drugs in development. Novo may not currently be in the number one position, but it possesses extensive know-how, deep resources, and decades of experience in metabolic diseases. In my view, the company is well positioned to regain a more reasonable valuation and potentially deliver another strong growth cycle.

There is also the possibility that Novo expands more aggressively into peptides and related therapeutic areas. If that happens, the opportunity could be substantially larger than obesity alone. The market for performance enhancement, healthy aging, and broader metabolic optimization may eventually dwarf today's obesity market.

Overall, I see Novo evolving into a company with a dual-engine business model: high-volume, lower-margin baseline products generating dependable cash flow, combined with high-margin, innovative therapies that drive long-term growth even beyond obesity playground. That combination could significantly reduce some of the traditional risks associated with biotech investing.

I'm not suggesting that Eli Lilly won't be able to compete or adapt. In fact, Lilly has executed exceptionally well. However, Novo appears to be taking a different approach by pushing injectable therapies toward a more accessible, mass-market model. If successful, this could ultimately lead to a Novo–Lilly duopoly in the obesity and metabolic disease space.

I would also like to see Novo borrow a page from Lilly's playbook and focus on combining weight-loss therapies with molecules that mitigate side effects and improve tolerability. That could become an important competitive advantage over time.

As for the near term, my expectation is that Q2 results will be solid, although perhaps not spectacular. Assuming there are no major setbacks, I believe Q3 and Q4 could be the real highlights, driven by the rollout of oral Wegovy across Europe and continued development in the U.S. market.

In addition, Denmark's planned 3% reduction in corporate tax rates could provide a meaningful boost to earnings going forward.

NOVO wasnt a great investment at 140€... it was a great story and company back then. But now at 38€ the story is not as good and NOVO is overshadowed by LLY... but at this price its a steal and great investment. Also it works as awesome hedge against AI craze and potential economy downturn.

If I had to guess then there is very solid room to grow short term by end of the year to atleast 55-60€.