To put it simply as one of the best performing pharmaceutical stocks in recent years, NWT is certainly one of them. Even though in the US stock market is heavily adjusted in 2022, it is also thanks to its stellar weight-loss drug Wegovy that has seen its share price rise by more than 20%, up nearly 6 times since the beginning of 2019.

Norwood's stellar performance in the capital markets is inseparable from its solid track record. So what about its performance? We can focus on four key points: performance growth, market share changes, profitability changes, and shareholder returns.

1. Performance Growth Situation

For pharmaceutical companies, performance growth is mainly driven by the sales of all product lines. Some pharmaceutical companies have very balanced product lines, which is also very stable, and some pharmaceutical companies perform modestly most of the time, but there may be sudden explosive growth with the big sales of a particular drug.

Historically, Norwood has been a solid player overall. In terms of revenue, in addition to remaining relatively flat in 2017, Norwood's revenue grew every year for the rest of the 20 years since 2000, while Nord's record net profit growth has not fallen a year after 2000.

And in the last two years, Norwood's performance growth has been accompanied by explosive attributes. With the hot sales of products such as GLP-1 diabetes and obesity management represented by weight-loss drug Wegovy, Norwood's growth began to accelerate, with revenue growing by more than 25% year-on-year in 2022, more than 30% in 2023, and net profit growth of more than 50% year-on-year in 2023.

So, will Norwood's high performance growth continue in the future? This may depend mainly on two aspects, on the one hand, on whether the hot demand for GLP-1 products such as Wegovy continues, which is a major driver of the potentially high growth in recent quarters.

On the other hand, the potential R&D pipeline is advancing, after all, demand for a single product may be limited, and high growth may be difficult to sustain when revenues are on a high base, so we also need to keep a close eye on Norwood's other new products, especially breakthroughs of new products with high market potential.

2. Change in market share

Norwood focuses primarily on diabetes and obesity care and rare disease management, the former of which accounts for more than 90% of revenue, and is a focus for us.

Among them, the diabetes market is home to Norwood and has always been an area of strength. Its market share has been expanding steadily in recent years to account for 1/3 of the global market in 2023.

The obesity management market is an area where NWB has risen rapidly in recent years and is one of the focus of the market's attention. Before November 2023, the two weight loss drugs Wegovy and Saxenda under the banner of Nove were the only two drugs to receive FDA approval, so to speak, a unique one. In 2023, Norwood reached 54.8% of the market share in GLP-1 drugs, more than half of Jiangshan.

However, by November 2023, Zepbound's weight-loss drug Zepbound was also approved by the FDA, starting with portions of Sycamore and Nord. The two giants vying for share of the weight loss drug market has also become the focus of the market.

Compared to Zepbound, the disadvantage of Node and Nord Wegovy is that its price is quite expensive. According to data disclosed by both official websites, Wegovy costs about $1,349 per month, which is almost 30% more expensive than Zepbound's $1060. And in terms of weight loss effects, although Lai claims that its product has been better in three phase trial data, the positive PK of the two has not been conducted in head-to-head trials, there is still no certainty.

The advantage of Norwood Wegovy is that it has an earlier time to market and has an early advantage in terms of brand and channel building. With both health management and medical and consumer properties for weight loss, Norwood's Wegovy commercialization is earlier, the channel may also be broader, and the brand influence in the consumer community is deeper.

In addition, Wegovy's capacity build is also earlier, and both Wegovy and Zepbound are currently in short supply, but Wegovy has a longer time to prepare, which is also conducive to increased shipments and expanded market share.

Therefore, in the field of weight loss drugs, we need to focus on the head-to-head situation between Noo and Nord and the changes in market share of the two. And in the area of diabetes, we can see if Noor and Nord can continue to consolidate their leading positions in the future.

3. profitability

Norwood's solid business and leading position in the diabetes and obesity management markets are also reflected in profitability.

From historical data, Norwood's profitability is very stable and is at a relatively high level. We can observe three indicators.

The first indicator is the gross profit rate. From 2014-2023, Norwood's gross profit rate has been stable at around 84% per annum, with a fluctuation of no more than two points per year, so to speak, rock-solid. NORD'S ABILITY TO MAINTAIN SUCH AN EXCELLENT LEVEL OF GROSS MARGIN MAY BE DUE TO ITS STRONGER COMPETITIVE POSITION AND RELATIVELY HIGH NEGOTIABILITY.

The second indicator is the net profit ratio. Since 2015, Norwood's net profit margin has basically remained around 33%, with no more than two points up and down, and is also very stable. By 2023, Norwood's sales and R&D expenses are diluted, net profit driven by the scale-up in revenue growth. The rate also rose a few percentage points to about 36%.

The third indicator is the return on net assets, and Munger said that over the long term, stock returns remain consistent with the company's ROE, so this is perhaps one of the indicators that shareholders care about the most. Since 2015, Norwood's net asset return has basically remained above 70%, reaching a very high level of about 88% in 2023.

In future results, we can continue to focus on changes in several profitability indicators at Nook and Nord to determine changes in their competitive environment as well as changes in overall profitability.

4. Return to Shareholders

For many mature pharmaceutical stocks, R&D spending has stabilized, and capacity building is advancing in a gradual manner, so that the money earned is not enough, and there is naturally ample cash flow to return to shareholders.

The way a listed company returns to shareholders mainly involves two aspects: dividends and buybacks. Dividends are a direct distribution of cash to shareholders, which is the most direct way to give back to shareholders, while buybacks can increase the company's net asset return and earnings per share, and inject additional liquidity into the market, which can be said to be a lot and is very popular with shareholders.

As a traditional behemoth in pharmaceutical stocks, Norwood is equally at a loss when it comes to returning shareholders. And the way it gives back to shareholders is basically dividends and buybacks. For example, between 2011 and 2023, the cumulative repurchase amount for NWB was DKK 22.14 billion, and the cumulative distribution of dividends amounted to DKK 2278 billion. During this period, Norwood's net profit was DKK 5078 billion, plus dividends and repurchases accounted for 88.5% of its net profit. The vast majority of net profit was distributed to shareholders, which is very generous to shareholders.

However, this ratio dropped to about 74% in 2023, and given that the company needs to invest a lot of capital to expand the production capacity of drugs such as Wegovy, and the dividend decline in sentiment, we can continue to see if the company can continue to return to the shareholder return ratio near 90% after capacity building regresses back to normal.

Finally, to summarize,

For Norwood's performance, we can focus on 4 key points: performance growth, market share changes, profitability and shareholder returns.

For performance growth, we must focus both on the continued explosive growth of our existing Star products and on the progress of our R&D pipeline.

For market share changes, we can focus on the twin battles of the weight loss drug market, and the persistence of Norwood's position as the leader in the diabetes market.

For profitability, our focus is on whether gross margin, net profit margin, and net asset return will remain at their current high positions.

For shareholder returns, we can focus on the ratio of dividends and repurchases to net profit, and whether it will return to the high of around 90% after the end of the centralized performance building.