The CEO of Novo Holdings said on Tuesday the controlling shareholder of Danish drugmaker Novo Nordisk (NOVOb.CO) is ready for a huge windfall from the runaway success of weight-loss drug Wegovy.
Novo Holdings invests and manages the wealth and assets of the Novo Nordisk Foundation, whose newly bulging coffers could make it a major philanthropic player and environmental, social and governance (ESG) investor.
Referring to estimates that Wegovy and other drugs will generate returns of more than $12 billion in the coming years, Novo Holdings CEO Kasim Kutay said: "If these forecasts are correct, that's a hell of a lot of money coming our way over the next decade and hopefully more."
He was speaking to a group of journalists in Copenhagen, where the investment company and Novo Nordisk are both headquartered. Last month, the drugmaker overtook LVMH (LVMH.PA) to become Europe's most valuable listed company, worth about 385 billion euros ($403 billion) - more than Denmark's GDP.
Novo Holdings holds 28.1% of economic (or A) shares and 76.9% of voting (or B) shares in Novo Nordisk, whose share price has nearly tripled since Wegovy's launch in June 2021, with it and another weight-loss and diabetes drug, Ozempic, driving record profits.
According to Berenberg analysts and Reuters calculations, the Novo Nordisk Foundation will receive about $12.5 billion in returns between last year and 2026 - roughly double its income in 2018-2021, before Wegovy launched in the United States.
The Foundation uses its returns to fund investments made by its wholly owned investment and holding company, Novo Holdings, and to make charitable grants.
After years out of the spotlight - it had only three employees in 2009, compared with 180 now, according to its website - the amount of money now at the Foundation's disposal could make it hugely influential.
Kutay said he believes Novo Holdings' systems and policies are robust and that he is "cautiously optimistic" it can handle the ferocious growth in its wealth.
"It changes my life a lot. I've got to invest that money. It comes with a huge responsibility," said Kutay, who has led the firm since 2016. He previously worked for investment bank Moelis & Co and U.S. bank Morgan Stanley.
Novo Holdings will hire more people, potentially open more offices and expand its geographic presence, he said.
Earlier on Tuesday, he said Novo Holdings had 160 employees as of June but is looking to grow to 180 next year. It has six offices globally, including one that opened in Shanghai earlier this year to focus on investments in China.
It also opened an office in Singapore several years ago, and has U.S. offices in Boston and San Francisco.
Total returns of Novo Holdings were down 6% in 2022, outperforming its benchmark and many peers, Kutay said, despite the negative underlying market trends.
($1 = 0.9542 euros)
