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Novo Nordisk (NVO) to Invest $4.1B in Clayton Facility Expansion

Novo Nordisk NVO recently announced plans to make a significant investment of $4.1 billion (approximately DKK 27 billion) to construct a second fill and finishing manufacturing facility in Clayton, NC. This new facility aims to enhance the company's capacity to produce injectable treatments for patients with obesity and other chronic diseases. This expansion underscores NVO's commitment to addressing the growing global demand for its medical products.

The investment represents one of the largest manufacturing expansions in Novo Nordisk's history. The new facility will add 1.4 million square feet of production space dedicated to aseptic manufacturing and finished product processes. This will effectively double the total square footage of all three of its current facilities in North Carolina. The significant scale of this expansion highlights the company's strategic efforts to strengthen its manufacturing capabilities in a key location.

In addition to the physical expansion, the new facility is expected to create 1,000 new jobs, adding to the nearly 2,500 employees already employed by Novo Nordisk in the region. This move reinforces the importance of North Carolina as a central hub for innovation and biotechnology within the United States. The substantial job creation and investment in local infrastructure will spur economic growth in addition to advancements in healthcare solutions.

Year to date, shares of Novo Nordisk have jumped 37.6% against the industry’s 20.9% decline.

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Zacks Investment Research

Image Source: Zacks Investment Research

The facility, to be set up in North Carolina, is designed with state-of-the-art technology, including rooftop solar panels and innovative water strategies, to ensure environmental sustainability and efficiency. It aims to deliver high-quality products to patients globally while pursuing LEED Gold certification, a prestigious standard for constructing healthy, efficient, carbon and cost-saving green buildings.

Per Novo Nordisk, early clearing and foundational work has already begun at the location to prepare the 56-acre facility footprint.Construction is expected to be gradually finalized between 2027 and 2029. At the peak of the project, approximately 2,000 external contractors will be involved.

Furthermore, NVO states that it will significantly boost its production investments to approximately $6.8 billion (DKK 45 billion) in 2024, nearly doubling the previous year's investment of $3.9 billion (DKK 26 billion), excluding acquisitions, to enhance supply capabilities.

According to a Reuters report, Novo Nordisk’s blockbuster chronic weight management injection, Wegovy (semaglutide 2.4 mg), received approval in China,the world's second-largest economy, today. This represents a significant market opportunity for the company as more than half of the Chinese people aged 18 and above are obese or overweight, according to a 2020 report from the country’s National Health Commission.

The company’s share prices gained in the pre-market hours on Jun 25, following the approval news in China.

However, Novo Nordisk will only get a small window to capitalize on this opportunity as the patent on semaglutide, the key ingredient in Wegovy and its diabetes drug Ozempic, is set to expire in 2026 in China. The patent is set to expire in the EU and Japan in 2031 and the United States in 2032.  Consequently, after 2026, generic versions will enter the Chinese market, significantly reducing the exclusivity and competitive edge of Wegovy and Ozempic in that region.

Ozempic was approved in China in 2021 and the drug has witnessed strong uptake in the region. In the first quarter of 2024, Ozempic recorded sales worth DKK 952 million in China, representing year-over-year growth of 19% at constant exchange rate.

Novo Nordisk is facing competition from Eli Lilly LLY, whose diabetes drug tirzepatide was approved in China in May 2024. Analysts predict that Zepound, Eli Lilly's weight-loss drug with the same active ingredient, may receive approval in China this year or in the first half of 2025. This intensifies the rivalry between the two companies in the burgeoning market for weight-loss treatments.

Both Novo Nordisk and Eli Lilly are striving to ramp up production in anticipation of a global weight-loss market to exceed $100 billion by the end of the decade. Their obesity treatments are part of a class of drugs known as GLP-1 agonists, which were initially developed for diabetes management.

Novo Nordisk A/S Price and Consensus

Novo Nordisk A/S Price and Consensus
Novo Nordisk A/S Price and Consensus

Novo Nordisk A/S price-consensus-chart | Novo Nordisk A/S Quote

Zacks Rank and Stocks to Consider

Novo Nordisk currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the drug/biotech industry are ALX Oncology Holdings ALXO and Annovis Bio ANVS, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past 30 days, the Zacks Consensus Estimate for ALX Oncology’s 2024 loss per share has remained constant at $2.89. During the same period, the consensus estimate for 2025 loss per share has remained constant at $2.73. Year to date, shares of ALXO have plunged 56%.

ALX Oncology beat estimates in two of the trailing four quarters and missed twice, delivering an average negative surprise of 8.83%.

In the past 30 days, the Zacks Consensus Estimate for Annovis’ 2024 loss per share has remained constant at $2.46. During the same period, the consensus estimate for 2025 loss per share has remained constant at $1.95. Year to date, shares of ANVS have plunged 67.2%.

ANVS beat estimates in three of the trailing four quarters and missed once, delivering an average negative surprise of 1.39%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Novo Nordisk A/S (NVO) : Free Stock Analysis Report

Eli Lilly and Company (LLY) : Free Stock Analysis Report

Annovis Bio, Inc. (ANVS) : Free Stock Analysis Report

ALX Oncology Holdings Inc. (ALXO) : Free Stock Analysis Report

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