The diabetes medicine Ozempic has been a veritable cash cow for Novo Nordisk (NYSE: NVO). The company's revenue, earnings, and stock price have been on a tear in recent years -- and no single drug has contributed more to its performance than Ozempic.
However, various potential headwinds have popped up that could disrupt Ozempic's progress. One of them is competition. Novo Nordisk's longtime foe in the diabetes market, Eli Lilly, developed Mounjaro, a diabetes medicine whose sales are growing incredibly fast.
Elsewhere, the side effects of Novo Nordisk's crown jewel have come under increased scrutiny, and a recent study suggests that Ozempic could have a dangerous safety issue. Let's look at what it could mean for Novo Nordisk.
Could Ozempic cause suicidal thoughts?
One of Ozempic's side effects that has generated quite a bit of attention is muscle loss. However, an even more dangerous potential drawback that some researchers have warned about is the possibility that Ozempic could increase suicidal thoughts.
A recent study claims to shed more light on this topic. The study looked at two medicines in the GLP-1 receptor agonist class, to which semaglutide, the active ingredient in Ozempic, belongs. The other GLP-1 medicine featured was liraglutide, the generic name for Victoza and Saxenda, which treat diabetes and obesity, respectively.
Liraglutide was another one of Novo Nordisk's discoveries. Through a database from the World Health Organization that tracks suspected adverse reactions from medicines and vaccines, the researchers found that Ozempic was associated with a higher rate of reported suicidal thoughts compared to other drugs. Liraglutide did not seem to be linked with higher rates of suicidal thoughts.
What should investors make of these findings? Should you sell the healthcare stock?
No reason to hit the panic button
Regulatory authorities are already aware of the potential association between Ozempic -- or at least its active ingredient, semaglutide -- and suicidal thoughts. Wegovy, an obesity medicine that shares this same active ingredient, has a warning for precisely that in the U.S.
Researchers sometimes learn even more about a therapy and its side effects after years of use in real-life settings. If studies establish a robust causal link between Ozempic or Wegovy and suicidal thoughts, that could cause regulators to take action. Perhaps they would add additional warnings or, in the worst-case scenario, take the medicine off the market. Either way, it would mean lower (or nonexistent) sales for Novo Nordisk's biggest growth driver, dragging down its revenue, earnings, and stock price.