A drug that literally makes people lose weight.

A decade ago, that would have been considered a gimmick if not an outright hoax. Today, it is a reality that has not only changed the weight-loss game for good, but holds the potential to disrupt numerous sectors related to peoples’ physical shape and size — clothing manufacturers and food producers being but two examples.

It’s not often that a drug comes along that changes the course of history. Yet that’s exactly what Novo Nordisk’s Ozempic and its sister drug Wegovy have done - and why Novo Nordisk (NVO), in its 100th year of operation, is Yahoo Finance’s 2023 Company of the Year.

Recent research from Goldman Sachs projects 15 million adults in the US will be on anti-obesity medications by 2030, representing 13% penetration in the US adult population — not including diabetic patients.

That’s already translated into some weighty sales numbers for Novo, in turn sending its stock price up close to 50% through 2023, well ahead of the S&P 500’s 20% gain.

To be sure, Ozempic is not necessarily the foolproof magic weight-loss elixir that some analysts and investors think and expect it to be. On the contrary, there is competition, knock-offs, and much more research and development ahead to truly make diabetes and by extension obesity a thing of the past.

Video Transcript

- This is the most American story ever. Big pharma created a drug to help Americans eat less.

- 2023 was all about one drug. The surprise popularity of Ozempic, a five-year-old type 2 diabetes drug, along with the weight loss branded version Wegovy, makes Danish drugmaker Novo Nordisk Yahoo Finance's 2023 Company of the Year.

LARS JORGENSEN: It's a big change. I've been with the company for more than 30 years. I'm only the fifth CEO in a 100-year-old company. And suddenly, we have brands that are becoming household names. And we've never ever had products that were widely known.

MYLES UDLAND: I think when we talked about Novo, it was really a company that had a product that became a verb of sorts this year. When people look at the celebrity world, they say, why is everyone so skinny now? The word that came to mind was Ozempic. At one point this year, they were the most valuable company in Europe. It really shows, I think, the primacy of Novo in being a leader in what I think most analysts expect to be, really, the future of health care coverage.

- In order to be a Company of the Year, Yahoo Finance determined that Novo achieved significant milestones in 2023. The company dominated the weight loss drug space with Wegovy and off-label Ozempic prescriptions. Novo's stock price has seen a close to 50% increase year to date, beating the SNP's nearly 20% return. And for the first nine months of the year, Novo's US sales grew by 46%, with international sales up 12 and operating profits climbing 31%. But increased demand has caused a supply shortage since late last year. It's why Novo is now investing more than $4 billion in expanding its manufacturing in Europe. And Novo is struggling to quash unapproved knockoffs being sold at clinics and medi-spas around the country.

Ozempic and Wegovy are known as GLP 1s, a class of drugs that helps increase insulin and slow digestion. GLP 1s are not new. In fact, they debuted nearly two decades ago in 2005. But the 15% body weight loss achieved by the active ingredient semaglutide is new and a key reason why Novo is currently the market leader. Plus, Wegovy could soon be approved to manage other health issues. Beyond healthcare, the drug could disrupt other sectors, like food, beverage, clothing, and air travel if more people take the drugs, according to analysts.

BROOKE DIPALMA: Even if 7% of the US population was on these drugs-- that's a bull case scenario-- by 2030, that would only lead to a roughly 2% decrease in same-store sales growth for restaurants. And many analysts saying that perhaps this isn't as disruptive as many had predicted earlier this year. Now retailers that have pharmacies inside-- think Walmart, think Kroger, think Costco-- with more consumers looking to that pharmacy to get these weight loss drugs, that can actually provide a boost for these retailers.

- Even Novo CEO Lars Jorgensen pushed back on the negative predictions.

LARS JORGENSEN: My view is that some of those reactions are perhaps a bit exaggerated. But there's no doubt that with the intervention we see now with the GLP 1-based medicines, you see significant shift in consumer behavior. And some of these categories will be impacted.