Fatten Your Portfolio with Diabetes Treatments

Biotech, Pharmaceuticals

As the emerging world’s economies grow and become more developed, healthcare professionals are worried about an unpleasant side effect.

Whenever populations’ dietary habits change amid economic growth, more and more people are become overweight. This, in turn, leads to a dramatic rise in cases of diabetes.

But there’s hope on the horizon for those suffering from this disease – and an opportunity for investors, too…

Diabetes is a chronic disease that occurs when the pancreas does not produce enough insulin, or the body cannot use the hormone well. Type 1 diabetes occurs when the insulin-producing cells fail to work, while Type 2 diabetes results when the body cannot keep blood sugar at normal levels due to obesity or a lack of physical activity. Type 2 accounts for 90% of the world’s diabetes patients.

The ailment is the ninth-leading cause of death globally, according to the World Health Organization. And if sugar in the bloodstream remains high in a person, it can damage blood vessels. This increases the risk of developing such complications as ischemic heart disease (hardening of the arteries). Cardiovascular diseases are the leading cause of death globally.

Diabetes Soaring in Asia and Africa

That change in dietary habits is leading to an unprecedented surge in diabetes among the populations of Asia and Africa, according to an article in the Nikkei Asia.

Traditional foods in Asia and Africa are low in calories and fat. But foods high in calories and fat have become easily available, thanks to the global spread of Western diets. As the number of fast food restaurants increases in urban areas in developing countries, people have more opportunities to eat foods rich in carbohydrates, sugar, and fat, leading to an increase in obesity and diabetes.

Here are some examples cited by the Nikkei Asia:

First, in Pakistan, half of the adult population is now considered obese, according to one study. There were 5.2 times more diabetes patients in 2021 than a decade earlier. Of the population from ages 20 to 79, 30% have developed diabetes.

Daily calorie intake per capita rose 43% in Vietnam and 39% in Ethiopia over the 20 years through 2018, compared to a global average of 8%. The number of diabetes patients rose 130% in Vietnam and 40% in Ethiopia in the decade through 2021.

The total number of diabetes patients in Asia and Africa is expected to reach 560 million by 2045, up 50% from 2021, according to the International Diabetes Federation. The number could rise 70%, to 220 million, in South Asia, while sub-Saharan Africa is expected to see a 2.3-fold jump, to 55 million people.

In comparison, increases in diabetes in Europe and North America are expected to grow at a lower rate, at 1.1 to 1.2 times.

Treating diabetes—especially in the emerging world—is expensive because it requires regular medications. And let’s not forget that some patients find it difficult to make the lifestyle changes needed for treatment. So, in the developing world, many cases of diabetes are untreated currently, translating to a vast untapped market for treating the disease.

Add it all up and the diabetes treatment healthcare subsegment is growing more important by the day. That leads to the company I want to bring to your attention.

Number 1 in Diabetes Treatments: Novo Nordisk

Novo Nordisk (NVO) is a global healthcare company founded in 1923, and headquartered in Denmark. Its focus is on diabetes and other serious chronic diseases, such as obesity, as well as rare blood and endocrine diseases.

The company is the global powerhouse in diabetes treatment, with about 30% of the $50+ billion global diabetes market and around half of the $20 billion insulin therapy market.

Novo Nordisk is also quickly becoming a powerhouse in the related area of obesity treatments, with its drug Wegovy. This drug works by mimicking a hormone known as GLP-1, which our intestines make when we eat, and which helps to regulate appetite. GLP-1 medicines were originally developed to help people with Type 2 diabetes better manage the disease by increasing the release of insulin from the pancreas, which aids in the removal of excess sugar from the blood following a meal. One such leading drug is Novo’s Ozempic, which is a multi-billion-dollar seller.

For many decades, doctors approached obesity as an individual problem that was best treated with lifestyle modifications, such as diet and exercise. But now, there is a growing body of scientific research that supports the use of pharmaceuticals in weight management.

That’s a key reason why analysts at Morgan Stanley forecast that these obesity treatments could soon be among the top-selling drugs globally, with sales growing from just $2.4 billion in 2022 before soaring to $54 billion by 2030.

While insulin accounts for roughly 50% of Novo’s top line, its GLP-1 franchise (Rybelsus, Victoza, Saxenda, Ozempic, Wegovy) is where the growth lies, now making up roughly 40% of sales.

Morningstar analyst Karen Andersen believes Novo Nordisk will have a more-than-60% share—$25 billion of the nearly $40 billion global GLP-1 market—across indications by 2026.


The prevalence of diabetes is expected to soar in the coming decades, as a result of an increasingly overweight and aging global population. That will only benefit Novo Nordisk as it continues to dominate in diabetes and obesity treatments.

With a solid portfolio of GLP-1 products, including Ozempic and Rybelsus, Novo Nordisk is well positioned to defend its diabetes market share and even grow it. Keep in mind, the impact of soaring demand for Wegovy is only beginning to be felt.

While Novo Nordisk trades at about 31 times next year’s forecast earnings (far cheaper than many of its rivals), I believe NVO stock will be a big winner, outperforming its peer group by a large margin—just as it did during the past decade. The stock is trading around $140 a share, up nearly 40% over the past 52 weeks. It’s a buy in the $130 to $150 range.