Wegovy, Ozempic Maker Novo Nordisk To Invest $4.1B In US Manufacturing, Doubling Plant Size To Meet Surging Demand For Weight Loss Drugs

Novo Nordisk A/S NVO is set to invest $4.1 billion in expanding its U.S. manufacturing operations to meet the increasing demand for its weight loss drugs.

What Happened: The Danish pharmaceutical company plans to build a new 1.4 million square foot manufacturing plant near Raleigh, North Carolina, doubling its size, the company said in a release. The additional capacity is expected to be operational between 2027 and 2029.

The investment is a response to the growing market for GLP-1s, a new class of diabetes and weight loss drugs. This market is projected to reach $130 billion by 2030, according to the Financial Times report. The expansion will also address recent shortages of Novo Nordisk’s Wegovy weight loss drug and Ozempic diabetes treatment, as well as Eli Lilly’s rival Zepbound and Mounjaro medicines.

See Also: ‘Dogecoin Killer’ Shiba Inu Falters — Here Is What These Key Indicators Reveal About Its Short-Term Prospects

Novo Nordisk’s investment is part of a larger trend in the pharmaceutical industry. In 2023, the company announced a $6 billion investment to expand its manufacturing facilities in Denmark.

Why It Matters: The surge in demand for weight loss drugs has been a significant driver of Novo Nordisk’s performance. Despite supply constraints and competition from Eli Lilly, the company has seen a surge in the number of patients starting on its weight-loss drug, Wegovy, in the U.S. This increase led to a doubling of Wegovy sales to 9.38 billion kroner ($1.35 billion) in the first quarter of 2024, despite pricing pressure.

However, supply issues at Novo Nordisk’s facilities could benefit Eli Lilly, with some speculating on a potential stock split for the U.S. company. Eli Lilly’s weight loss drug Zepbound resolved previous supply issues, especially in major cities, potentially benefiting from Novo Nordisk’s supply limitations.

Price Action: Novo Nordisk A/S’s stock closed at $142.28 on Monday, up 0.23% for the day. In after-hours trading, the stock rose an additional 0.28%. Year to date, Novo Nordisk’s stock has seen substantial growth, increasing by 39.34%, according to the data from Benzinga Pro.

Read Next: Nasdaq Futures Slip As Nvidia Sell-Off Continues, S&P 500 Futures Hold Up: Analyst Says ‘Valuations Will Go Parabolic And It Will Be A Perfect Time To Sell’

Image Via Shutterstock

This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote