The usage of a controversial diabetes drug has been beneficial for Munro Partners’ global growth fund with the firm expecting this type of medication to become the next “blockbuster drug”.
Diabetes medication Ozempic was currently making a splash in the United States where it was being used off-label by consumers, allegedly including Hollywood celebrities, as a weight-loss drug.
This had caused supply problems as it was causing shortages for Type 2 diabetics who needed it as their regular medication as well as potential medical problems for those who took the drug unnecessarily for cosmetic reasons, although it was safe for its intended patients.
The drug, produced by Danish firm Novo Nordisk, had been followed by the launch of another similar obesity drug called Wegovy which was capable of delivering a 15%-20% reduction in Body Mass Index (BMI) over several months.
Novo Nordisk was part of an 11% weighting to healthcare in the $1.3 billion Global Growth fund although it sat outside their top five holdings.
Munro said the drug company had contributed 15 bps to performance in the month and had previously contributed 62bps in the December quarter.
Shares in Novo Nordisk had risen 43% in the past year to 13 March and 6% since the start of 2023.
“The excitement around market potential has been understandable as only 2% of the 650 million people living with obesity seek treatment using anti-obesity medications (AOMs). As such, it is widely expected that GLP-1’s [glucagon-like peptides] for weight loss stands to become the pharma industry’s next blockbuster drug category with sales potential ranging from USD$30-$50bn by 2030,” Munro said.
“The market structure also remains favourable as a duopoly, with the only two companies to sell GLP-1s for obesity being Novo Nordisk and Eli Lilly for the foreseeable future.”
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