LONDON, Sept 1 (Reuters) – Danish drugmaker Novo Nordisk (NOVOb.CO) on Friday overtook LVMH (LVMH.PA) as Europe’s most valuable listed company, taking the French luxury group 2-1 to the top /2 year rule expired. ,
LVMH, the world’s largest luxury retailer, has been hurt by growing concerns about the outlook for the Chinese economy.
Meanwhile Novo is riding a wave of demand for its highly effective diabetes and weight-loss drugs Ozempic and Vegovy, which have driven its earnings and shares to record highs.
Its shares have risen nearly 17% since announcing on August 8 that a large study showed Vegovy also had clear cardiovascular benefits, prompting the company to move beyond its image as a lifestyle drug. Expectation has increased.
As of Friday’s close, Novo Nordisk had a market capitalization of about $424.7 billion including unlisted stock, according to disclosures from Refinitiv data and the company’s share count.
French-listed LVMH (LVMH.PA) with a market capitalization of $420.1 billion has been Europe’s largest listed company since February 2021, when it ousted consumer goods group Nestlé (NESN.S) from the top spot.
23-year timeline of Europe’s biggest company 23-year timeline of Europe’s biggest company
Novo’s share price has nearly tripled over the past three years, while that of LVMH, home of fashion labels Louis Vuitton and Dior, has doubled.
Marcel Stotzel, Co-Portfolio Manager, Fidelity European Fund and Fidelity European Trust, said, “Novo’s closing on LVMH as Europe’s largest market cap stock is reflective of Novo’s recent product success, while LVMH’s recent trends are more mixed.” Have been.”
Stotzel said both stocks remain major holdings in his fund.
Shares of Novo are nearing record highs, highlighting investor appreciation for the strategy that has given the company a first-mover advantage in the growing market for obesity drugs.
The weight loss drug market is expected to reach $100 billion in annual sales within a decade. According to Barclays, sales currently stand at around $6 billion.
“The market share should be split relatively evenly between Novo Nordisk and Eli Lilly, the two main companies behind obesity treatments,” said Axel Pinen, a member of Carmignac’s investment committee.
Eli Lilly & Co (LLY.N) expects to get US weight-loss approval for its similar drug, Monjaro, later this year.
Novo said on August 8 that study data showed that Vegovy reduced the risk of a major cardiovascular event, such as stroke, by 20% in people who were overweight or obese with a history of heart disease. Much more than expected.
The results could help persuade insurers and health officials to cover the cost of Vagovi, which in the United States is about $1,300 a month for a wide range of patients.
“These results are reducing the risk of further adoption for these drugs, justifying such a market move,” said Carmignac’s Pinon.
Analysts said a rally in Novo’s share price is likely to increase its weighting in the sector-wide STOXX 600 index (.STOXX), which could attract more investment from passive investors.
Concerns about China’s weakening economy have hurt sentiment towards LVMH, which also owns Hennessy cognac and US jeweler Tiffany.
European luxury stocks rallied in early 2023 as investors hoped for a faster economic recovery after China lifted COVID-19 restrictions.
But recent data and a crisis in the property sector have worsened the outlook for the world’s No. 2 economy, with the burden falling on the luxury sector that is heavily dependent on Chinese consumers.
“There has been a series of weaker-than-expected data and Chinese authorities’ reluctance to offer large amounts of stimulus are worsening the outlook for these luxury retailers, whose revenue growth comes in large amounts from China,” said a City Index market analyst. Has been.” Fiona Cincotta.
Shares of Novo Nordisk closed up 2.14% on Friday while those of LVMH were down 0.8%. Shares of LVMH have fallen 14.2% from their all-time high hit in April, underperforming Europe’s broader STOXX 600, which is down about 2.2% over the same time frame.
Rival Compagnie Financier Richemont (CFRS.S) has since fallen 17.9% and Hermes (HRMS.PA) is down about 6.4% since then.
Additional reporting by Samuel Indik and Dhara Ranasinghe; Editing by Amanda Cooper and Catherine Evans
Our Standards: The Thomson Reuters Trust Principles.
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