We recently compiled a list of the 13 Best Pharma Dividend Stocks To Buy In 2024. In this article, we are going to take a look at where Novo Nordisk A/S (NYSE:NVO) stands against the other pharma dividend stocks.
The pharmaceutical industry in 2024 faced a relatively quiet year, with deal volumes similar to 2023 but lower deal values, reflecting a shift toward smaller, more strategic transactions. Despite challenges such as patent expirations and market uncertainty, innovation remains strong, and there is a better investment environment for biotech. Lower interest rates have also eased capital costs, contributing to increased mergers and acquisitions activity. Biotech IPOs and venture capital investments are seeing a slight recovery, though investment is more concentrated in established companies. However, major pharmaceutical companies face a $300 billion growth gap due to patent expirations, making dealmaking crucial for future growth.
Looking ahead to 2025, EY believes that the pharmaceutical sector is expected to see more deal activity, especially if interest rates remain low. There may be a rise in larger acquisitions to address growth gaps, although smaller, strategic deals are likely to persist. Politically, the US policy environment is shifting with potential impacts on business, including lower corporate taxes and deregulation, but also the possibility of higher tariffs and continued drug pricing reforms. Changes in immigration and leadership within health agencies could also affect the pharmaceutical and biotech industries, with new appointees potentially disrupting the regulatory landscape.
As executives prepare for 2025, drug pricing and access remain their top concerns, according to a Deloitte survey. The survey highlighted that primary concerns include competition from generic drugs and biosimilars and the looming patent cliff, with over $300 billion in sales at risk due to expiring patents by 2030. This has executives expecting a surge in mergers and acquisitions in 2025.
Innovation remains at the forefront as companies look to fill gaps left by expiring patents. However, competition in profitable areas like oncology and immunology is fierce, leading to price pressures even before generics or biosimilars hit the market. On the flip side, the success of GLP-1 receptor agonists is sparking renewed interest in general medicines, with companies racing to tap into the $200 billion market. Additionally, about 20% of companies are adjusting their portfolios to focus on high-potential candidates and better meet market demands. Advanced therapies like cell and gene therapies are also gaining attention, with a shift away from more traditional drugs.
In addition to the competitive landscape, life sciences companies are also keeping a close eye on regulatory changes. In the United States, concerns about the Inflation Reduction Act are growing, while in Europe, shifts in clinical trial regulations could add complexity. As a result, life sciences companies are preparing for a year of both innovation-driven growth and regulatory challenges.
Our Methodology
In this article, we reviewed Insider Monkey’s Q3 2024 database to identify pharmaceutical dividend stocks that hedge funds favored the most. The companies listed below are ranked in ascending order based on the number of hedge fund holders in each firm.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)
An elderly couple receiving insulin from a pharmacist, representing healthcare company’s successful pharmaceutical products.
Novo Nordisk A/S (NYSE:NVO)
Dividend Yield as of December 28: 1.70%
Number of Hedge Fund Holders: 61
Novo Nordisk A/S (NYSE:NVO) develops, manufactures, and distributes pharmaceutical products globally, focusing on two primary segments – Diabetes and Obesity Care and Rare Diseases. The company offers treatments for diabetes, obesity, cardiovascular conditions, rare blood and endocrine disorders, and hormone replacement therapy. Novo Nordisk A/S (NYSE:NVO) ranks 11th on our list of the best dividend stocks.
Novo Nordisk A/S (NYSE:NVO) has had a strong first nine months of 2024, with sales up by 24% and operating profit growth of 22%, driven by scaling efforts and increasing demand for its diabetes and obesity treatments. They’ve tripled the number of patients using their GLP-1 treatments over the past three years, now reaching over 11.5 million patients worldwide. This growth was largely fueled by weekly injectables like Ozempic and Wegovy, with obesity care sales up 44% and diabetes care growing faster than the overall market at 21%.
In North America, GLP-1 sales for diabetes grew 33%, solidifying Novo Nordisk’s 54% market share, while globally, Wegovy sales surged 77%, supported by rising prescriptions and expanded market access. Meanwhile, their international operations saw a 95% growth in the branded obesity market, with Wegovy now available in more than 15 countries.
Novo Nordisk A/S (NYSE:NVO)’s 2024 free cash flow fell to DKK 71.8 billion from DKK 75.6 billion in 2023, driven by higher capital spending of DKK 31.1 billion, up from DKK 16.4 billion. The increase reflects investments in expanding production capacity, emphasizing the company’s focus on internal growth before shareholder returns and business development. NVO paid a $0.512 per share quarterly dividend to shareholders on August 26.
Insider Monkey’s Q3 database shows that 61 hedge funds were bullish on Novo Nordisk A/S (NYSE:NVO), compared to 67 funds in the last quarter. Ken Fisher’s Fisher Asset Management is the biggest stakeholder in the company, with 13.30 million shares valued at $1.58 billion.
Overall NVO ranks 11th on our list of the best pharma dividend stocks to buy in 2024. While we acknowledge the potential of NVO as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.