For the first time ever, drugs that combat obesity are under consideration for the World Health Organization's (WHO) "essential medicines list". This list is used to guide government medicines purchasing decisions in low- and middle-income countries.

Here's why. . .over 650 million adults worldwide are obese, more than triple the rate in 1975. And roughly another 1.3 billion adults are overweight, exacerbating conditions, such as heart disease and diabetes, according to the World Health Organization.

So now the agency is conducting its first review of obesity management guidelines since 2000.

The WHO is not alone in its interest. For many decades, doctors approached obesity as an individual problem that was best treated with lifestyle modifications, such as diet and exercise. But now, there is a growing body of scientific research that supports the use of pharmaceuticals in weight management.

Two of the more prominent weight management drugs are NovoNordisk's(NVO)Wegovy and EliLilly’s(LLY)Mounjaro.

These drugs work by mimicking a hormone known as GLP-1 that is made in the intestines when we eat and helps to regulate appetite. GLP-1 medicines were originally developed to help people with type 2 diabetes better manage the disease. These medicines do so by increasing the release of insulin from the pancreas, which aids in the removal of excess sugar from the blood following a meal.

Now, trials have shown these drugs have helped patients lose about 15% of their weight as well. Wegovy is approved for weight-loss in the United States and Europe, while Mounjaro is expected to receive U.S. approval later this year.

The enormous demand for weight-loss drugs is expected to be worth $100 billion in annual sales within a decade, with as many as 10 different drugs on the market. However, most of the benefits is expected to accrue to the early leaders.

That's why I want to focus your attention on the company that has had a jumpstart on the competition, Novo Nordisk.

Novo Nordisk: Weightloss Leader

It is a global healthcare company, founded in 1923, and headquartered in Denmark. Its focus is on diabetes and other serious chronic diseases, such as obesity, as well as rare blood and endocrine diseases.

Importantly, Novo Nordisk is THE global powerhouse in diabetes treatment, with about 30% of the $50+ billion global diabetes market and around half of the $20 billion insulin therapy market.

The company is also quickly becoming a powerhouse in the related area of obesity treatments, with its drug Wegovy.

The demand surge for Wegovy has been so great, the company has had trouble keeping up with it. Wegovy has been flying off the shelves, with sales soaring an unprecedented 124% in the first quarter of 2023!

That is leading to the company investing heavily in more production for Wegovy. Novo has two contract manufacturers producing Wegovy - one in Europe and one in the United States - and has signed up a third in the United States, which will start producing in the later part of this year. And the company will be adding even more manufacturers. Novo Nordisk produces the active pharmaceutical ingredient for Wegovy and outsources the filling of single-use syringes to manufacturers.

The soaring demand for weight-loss drugs is helping it another way too. The demand surge after Wegovy's launch boosted sales of Novo's older GLP-1 drug, Saxenda. It has a different active ingredient and lower effectiveness, reducing weight by between 5% and 10% on average. Sales jumped 42% to $1.5 billion in 2022 year compared to 2021.

The United States is expected to account for as much as 90% of weight-loss drug sales. This is due to both the number of potential patients and higher pricing for drugs than other countries.

U.S. doctors are writing more than 100,000 prescriptions per week for Wegovy, according to the company. In recent weeks, Wegovy prescriptions for new patients have exceeded 30,000.

So it's easy to see why, for now, Novo Nordisk is prioritizing U.S. supplies of Wegovy over launching the drug in new markets.

Buy NVO

While insulin accounts for roughly 50% of Novo Nordisk's top line, its GLP-1 franchise (Rybelsus, Victoza, Saxenda, Ozempic, Wegovy) is where the growth lies – it now makes up roughly 40% of sales and climbing.

And let's not forget that the prevalence of diabetes is expected to soar in the coming decades, as a result of an increasingly overweight and aging global population. That will only benefit Novo Nordisk as it continues to dominate in both diabetes and obesity treatments.

With a solid portfolio of GLP-1 products, the company is well positioned to defend its diabetes market share and even grow it. Keep in mind too that the impact of soaring demand for Wegovy is only just now beginning to be felt.

Shares in Novo Nordisk have risen about 100% since the firm launched Wegovy in the U.S. in June 2021. The company's stock is the best performing in Europe.

While Novo Nordisk trades at around 31 times next year’s forecast earnings (far cheaper than many of its rivals), I think NVO stock will be a big winner, outperforming its peer group by a large margin – as it did during the past decade.

The stock is trading around $158 a share, up 41% over the past 52 weeks and 15.5% year-to-date. I believe the stock is a buy in the $150 to $170 range.