As you can probably imagine, Ozempic and Wegovy will not be the last popular and profitable drugs. novo nordisk (NGO 0.27%) put it on the market. Nor does the Danish pharmaceutical giant intend to focus solely on developing further treatments for diabetes and obesity, regardless of how good its track record is with these treatments.

Instead, the company plans to diversify into yet another major market, perhaps making shareholders a little richer in the end.

Smart positioning allows you to compete in more profitable markets

Novo on Monday announced its intention to acquire Cardiol Pharmaceuticals, a private German biotechnology company pursuing treatments for cardiovascular diseases, for approximately $1.1 billion. Its lead drug candidate, her CDR132L, is in Phase 2 clinical trials and is aimed at helping people recover more effectively after a heart attack. It is also being studied in phase 1b trials as a treatment for heart failure.

Cardiovascular disease is a huge market. According to the report, this market will be worth nearly $67 billion in 2023 and is projected to grow to $84 billion by 2032. It’s clear that modern sedentary lifestyles don’t give people, on average, great results in their heart health.

But so far, Novo is not in a position to compete for a lion’s share of the ever-expanding cardiovascular treatment pie. Currently, no approved medicines are manufactured to treat heart disease. Additionally, the company has only two cardiovascular programs in its pipeline, both in Phase 1 clinical trials, so even if they receive regulatory approval, it will take years to bring them to market. It will be. Going forward, Novo Nordisk will enter yet another important therapeutic area where there is proven long-term demand for more and better medicines.

Cardior’s Phase 2 study of CDR132L is expected to take approximately one year to complete, by which time it is likely to be fully integrated as an R&D component of Novo Nordisk. Sometime from now, major pharmaceutical companies plan to begin new Phase 2 trials of drug candidates for chronic heart failure.

Novo could develop a new blockbuster drug well before the end of the decade. And that’s another reason to invest in it.

There are multiple factors at play here

In fact, Novo Nordisk has more long-term upside potential from the Cardiol acquisition than is apparent at first glance. This meant we had the opportunity to combine our medicines to create new products with potentially superior efficacy.

Weekly weight loss shots Wegovy is already a huge hit, with sales of over $4.5 billion in 2023 (407% increase over 2022). On March 8, the Food and Drug Administration approved the company’s application for the drug, which is indicated to reduce the risk of cardiovascular disease in people who are overweight or obese. For the record, regulators consider 70% of Americans to be overweight or obese.

As everyone knows, excess weight is a major risk factor for developing heart disease. Leveraging Cardior and Wegovy’s assets enables Novo to develop combination therapies that address the factors that increase the risk of heart disease and reduce the damage that occurs when that risk materializes. . And a large portion of the population may be eligible for such treatment. The Novo Nordisk investment thesis practically writes itself.

Nevertheless, the company will have a lot to accomplish between now and its bright but speculative future. There is always a risk that Cardior’s programs may not perform as expected in late-stage clinical trials or that its candidates may not or cannot be used in combination with other drugs. But in this case, the potential benefits to shareholders outweigh the risks, at least given the facts that are clear at this point.