Today’s news around $NOVO B (-5,74%) is a reminder of what real risk looks like in the pharmaceutical sector. The stock had been climbing in recent weeks as the market anticipated results from the company’s Alzheimer’s research, based on semaglutide, the drug widely known for its role in weight-loss treatments. The idea that it might also help in Alzheimer’s came almost by accident, from observations in other patient groups.
Novo itself called this research a “lottery ticket.” If it worked, it could redefine the company’s long-term future. If it failed, the cost was modest.
The results released today show no meaningful effect on Alzheimer’s, and that’s why the stock is dropping. But the core business of Novo doesn’t change. GLP-1 drugs remain one of the most powerful growth stories in global healthcare, and if this category continues to expand, the company still has strong momentum ahead. At current prices, the stock trades close to a 12 P/E, which makes the valuation increasingly appealing.
At the same time, we shouldn’t ignore the structural risks. Pharma companies live and die by clinical outcomes, and no one can predict how long a blockbuster will dominate before something superior emerges. That’s why positions in this sector should stay relatively small, no matter how attractive the story appears.
Today’s news simply removes a potential upside, not the underlying value of the company. This makes the market reaction far more rational than it looks at first glance.
