Sometimes the solution seems simple, and the idea will generate interest and it will take over the public’s interest and all seems good. In this following example, the simple idea is the Americans in particular are overweight which means a great deal of health-related costs. If there was a drug to help combat the weight, the pounds would disappear and the people would be healthier. That is a good thing. For investors the issue is who is doing it? and is the government helping?

In an article by Louise Rasmussen, Jacob Gronholt-Pedersen and Maggie Fick of Reuters, one company had a drug that showed many signs it also helped with weight loss. Novo Nordisk, the maker of Wegovy was originally developed for diabetes. In studies, people who were on it also showed weight loss, Novo’s people went back and out came Wegovy. It was one of the first big name drugs to come out, (in the world of drug making, being first is a very good thing because of patents). People started to use it, sales began to soar and so did the stock price. For a time, Novo Nordisk was the stock with the largest market capitalization in Europe.

When there are profits to be made, all companies salivate towards where the profits are coming from and soon Eli Lilly had a drug and it became the leader in the obesity and diabetes markets. Thus has resulted in Novo doing restructuring or 9,000 people were laid off. The number represents 15% of Novo’s worldwide workforce.

Lukas Leu, a portfolio manager at ATG Healthcare, said the obesity market was misjudged. It is much more consumer-driven than anticipated and Novo expanded organizational complexity too quickly.

At the present time the drug Wegovy is done through syringes but there is a pill coming. Eli Lilly’s Zepbound overtook Wegovy in weekly prescriptions in the US earlier this year. The company is expecting profits to come at the 4 to 10% rather than 19 to 27%.

Linking to dividend paying companies, execution is what you are paying for when buying a dividend paying stock which continues to make profits. The ideas are great, but how companies make money from the end user is what profitable business is all about.

There are more questions than answers, till the next time – to raising questions.