A weight-loss drug company is close to becoming Europe's biggest market cap stock

The incidence of obesity among adults in the European Region surpasses all other WHO regions, with the exception of the Americas. Photo: Jeff J Mitchell/Getty Images (Getty Images)

Europe is currently grappling with an obesity crisis, and this is becoming evident in its valuation of companies. Novo Nordisk, a Danish pharmaceutical firm known for producing widely-used weight-loss medications Ozempic and Wegovy, momentarily exceeded the market capitalization of LVMH on Sept. 1. LVMH, the world's largest luxury goods retailer, recognized for brands such as Louis Vuitton, Dior, Hennessy, and Tiffany, has held the top spot for the most valued company in Europe since February 2021, when it surpassed Nestle. However, LVMH reclaimed its position later in the day, with its value reaching approximately $435 billion, while Novo dropped to around $426 billion.

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Nonetheless, Novo's expansion is expected to persist, having tripled over the past three years, while LVMH's growth has doubled. A downturn in China's economy is also affecting LVMH's sales, as the company heavily depends on China's consumer market.

This trend could indicate that Europeans place equal importance on weight loss and luxury goods. According to a recent World Health Organization (WHO) report, approximately 59% of adults and nearly one-third of children in Europe are overweight or obese. The rate of obesity in Europe is higher than in any other WHO region, except for the Americas.

Novo has claimed that its drug Wegovy could potentially reduce the risk of heart attack or stroke by 20% in overweight or obese individuals with a history of heart disease. Ozempic, which reduces blood sugar levels, is sought after as an extremely effective diabetes and weight-loss medication, but is currently in limited supply globally.

The weight loss medication market is projected to achieve $100 billion in annual sales within the next decade.