Novo Nordisk Drugs Are Shaking Up Stock Markets Again

The disruptive impact on stock markets of Novo Nordisk A/S’s diabetes drugs is getting ever wider.

(Bloomberg) — The disruptive impact on stock markets of Novo Nordisk A/S’s diabetes drugs is getting ever wider.

The Danish company, now Europe’s largest by market value, said late Tuesday it was halting a study which looked at the impact of its blockbuster Ozempic drug on kidney failure after it showed effectiveness surprisingly early.

The news hit shares of the world’s biggest kidney dialysis providers. Fresenius Medical Care AG & Co. plunged as much as 24% in Frankfurt, while other kidney-related stocks such as DaVita Inc. and Baxter International Inc. tumbled in US premarket trading.

Novo’s Ozempic and Wegovy injectable drugs, a class of medicines known as GLP-1s, have been causing ripple effects across the stock market, for the makers of everything from snacks to booze. Last week, Walmart Inc. said it’s seeing an impact on demand from people taking Ozempic, Wegovy and other appetite-suppressing medications. That weighed on shares of other food and beverage companies.

Read: Ozempic Threat Is Spurring a Slump in Snack and Beer Stocks

“The body of evidence to support GLP-1 use, over and above weight loss and blood glucose control, continues to grow,” Citigroup Inc. analyst Peter Verdult wrote in a note, referring to Novo’s study.

As investors bet that this new class of weight-loss drugs will improve the overall health of millions of Americans, US health care stocks have underperformed the S&P 500 Index this year. Medical-device makers like Dexcom Inc. and Insulet Corp. have performed particularly poorly, down 25% and 50%, respectively.

But some stocks have been gaining along with Novo, which is up 43% year-to-date. Eli Lilly & Co., whose pipeline of drugs to treat obesity includes Mounjaro, is now the world’s biggest health-care company by market value. And shares in WW International Inc. — better known as Weight Watchers — have more than tripled this year. WW bought a telemedicine firm that prescribes obesity medications earlier this year.

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