What happened
Shares of Novo Nordisk(NYSE: NVO) were on an upswing Wednesday, following a report that it has secured a new contract manufacturer for a highly successful product. In midafternoon trading, the healthcare company's share price was more than 3% higher, comparing very well to the 1.3% gain of the S&P 500 index.
So what
Wednesday morning, Reuters published an article stating that Novo Nordisk has drafted Thermo Fisher Scientific(NYSE: TMO) as its second contract manufacturer for the highly popular Wegovy, a weight-loss drug that has taken the market by storm and remains very much in demand.
Citing an unnamed source, Reuters said that Thermo Fisher will fill the Wegovy injectable pens at its plant in North Carolina. Novo Nordisk declined a request to be interviewed for the Reuters article, and Thermo Fisher has not yet officially commented on it. The article did not specify any financial terms of the arrangement between the two healthcare companies.
In May, Novo Nordisk said that it had found a second contract manufacturer, although it did not identify its partner. This followed a set of production issues experienced by the first contract manufacturer, Catalent.
Now what
Reuters said that the average weight loss experienced by Wegovy patients is 15%, in combination with diet and exercise changes, so it's little wonder the drug is such a hot item.
Novo Nordisk is working to expand Wegovy's production base even wider; when it said in May that it had found a second contract manufacturer, it added that it also had secured a third. It did not identify which it is, but did say production would begin later this year.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Thermo Fisher Scientific. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
