ATP Doubles Novo Nordisk Stake Amid Market Challenges

ATP, Denmark's largest pension fund, has made a substantial investment in Novo Nordisk, the global leader in obesity treatment, by significantly increasing its stake in the company. This strategic move comes as Novo Nordisk navigates a competitive and challenging market landscape. According to ATP's latest disclosure, the fund nearly doubled its holdings in Novo Nordisk during the first half of the year, reaching 4.81 million shares by the end of June. The current market value of these shares is approximately 2.7 billion Danish kroner.

ATP's investment in Novo Nordisk is timely, as the pharmaceutical company faces considerable pressure. In May, Eli Lilly and Company released detailed results from a "head-to-head" study, revealing that its drug tirzepatide achieved an average weight loss of 20.2% at the 72-week mark, compared to Novo Nordisk's semaglutide, which achieved 13.7%. Additionally, Novo Nordisk announced that its CEO would step down, underscoring the pressure from the capital markets.

Despite these challenges, ATP remains optimistic about Novo Nordisk's future. Claus Berner Moller, the vice president of equities at ATP, stated that the fund is aware of the pressures facing Novo Nordisk but believes the company can turn things around and return to a growth trajectory. Moller emphasized that Novo Nordisk will need to rely more on markets outside the United States for growth in the short term.

Novo Nordisk's stock has declined by approximately 40% since the beginning of the year, primarily due to concerns about its growth prospects. The company attributes much of this pressure to competition from Eli Lilly and the impact of generic drugs. To address these issues, Novo Nordisk's new CEO has pledged to regain lost ground and has implemented cost-cutting measures, including a hiring freeze and potential layoffs.

ATP did not disclose the purchase price of its shares, but Moller revealed that most of the increase in holdings occurred towards the end of the first half of the year. He acknowledged that the stock price has since declined but believes that this drop makes Novo Nordisk more attractive relative to its peers. Moller noted that while Novo Nordisk's U.S. business faces challenges, its product portfolio, particularly in markets outside the United States, is expected to achieve relatively high growth.

In recent years, ATP has gradually reduced its investments in Danish domestic stocks, shifting more of its portfolio to international equities. However, it remains one of the largest investors in the Danish market, with a total portfolio value of 245 billion Danish kroner. This strategic shift reflects ATP's confidence in the long-term prospects of international markets and its commitment to diversifying its investment portfolio.