Strategy and Focus - Novo Nordisk focuses on innovation-driven opportunities within core therapeutic areas[9, 13] - The company's strategy centers on leading in Obesity, Diabetes, and related comorbidities[10, 14] Market Needs and Opportunities - There is a significant unmet need within Diabetes, with >550 million people living with T1D or T2D and ~7% of diabetes prescriptions are for a GLP-1[11, 15] - A significant unmet need exists within Obesity, with >900 million people living with obesity and only ~2% are treated with branded Anti-Obesity Medications (AOMs)[11, 15] - Select related comorbidities include >800 million people living with MASH, 250 million with CVD, and >500 million with CKD[11, 15] Key Priorities for 2026 - Accelerate commercial execution, including the launch of Wegovy® pill in the US and roll out of semaglutide 7.2 mg, and expand Direct-to-Patient and cash channels[18] - Reinforce organizational focus through organizational set-up & culture coming out of transformation and resource allocation towards growth opportunities[18] - Strengthen the R&D pipeline by progressing late-stage pipeline and bringing several new obesity & diabetes assets into the clinic[18] Forward-Looking Statements - The company's statements may contain forward-looking statements relating to operating, financial, and sustainability performance[3] - These statements are based on current plans, estimates, opinions, views, and projections, but actual results may differ materially due to risks, uncertainties, and assumptions[4]

Core Insights - Novo Nordisk's shares have increased by 18.8% in the past month due to the FDA approval of its Wegovy pill for obesity and cardiovascular risk reduction [2] - The approval of oral Wegovy marks a significant milestone as it is the first GLP-1 RA available in oral form for weight management, offering a more convenient administration option compared to injectables [3] - Novo Nordisk has gained a competitive edge by launching oral Wegovy before Eli Lilly's oral obesity drug, which is still under FDA review [4] Financial Performance - Ozempic and Wegovy generated DKK 152.5 billion in revenue during the first nine months of 2025, highlighting their role as major revenue drivers for the company [10] - Earnings estimates for 2025 have slightly decreased from $3.58 to $3.57 per share, and for 2026 from $3.65 to $3.51 [24][26] Competitive Landscape - Eli Lilly remains a strong competitor, with its tirzepatide-based drugs generating $24.8 billion in sales in the first nine months of 2025, accounting for 54% of its total revenues [13] - Novo Nordisk is facing increasing competition in the obesity treatment market, with new entrants like Viking Therapeutics developing GLP-1-based therapies [28] Strategic Developments - Novo Nordisk has submitted a regulatory application for CagriSema, a next-generation once-weekly injection for weight management, with FDA review expected in 2026 [5] - The company is also expanding its presence in rare diseases and liver care, with recent approvals for treatments related to hemophilia and liver conditions [14][15] Market Positioning - Novo Nordisk is currently trading at a discount compared to the industry, with a price/earnings ratio of 17.02, lower than the industry average of 17.56 [21] - Despite recent stock performance challenges, the company retains strong fundamentals and a broad pipeline, indicating potential for long-term growth [28]

Core Insights - Eli Lilly and Novo Nordisk are leading companies in the weight loss drug market, which is projected to reach nearly $100 billion by 2030 [1][2] - Both companies produce GLP-1 drugs that have gained significant popularity, with demand often exceeding supply [2] Novo Nordisk - Novo Nordisk has a first-to-market advantage with both injectable and now oral weight loss drugs, having launched Ozempic in early 2018 and Wegovy in 2021 [4][5] - The obesity care segment has driven revenue growth of 37%, reaching 59.9 billion Danish kroner (approximately $9 billion) in the first nine months of 2025 [5] Eli Lilly - Eli Lilly received approval for its tirzepatide, marketed as Mounjaro for type 2 diabetes and Zepbound for weight loss, in 2022 and 2023 respectively [6] - The company has experienced significant revenue growth, with Mounjaro and Zepbound generating about $10 billion in revenue in a recent quarter, contributing to an overall sales increase of 54% [8]

Core Insights - Oral weight-loss drugs are projected to constitute a third or more of the overall GLP-1 market by 2030, exceeding previous expectations from the company [1] Company Perspective - A Novo Nordisk executive highlighted the increased market share for oral weight-loss drugs, indicating a significant shift in market dynamics [1]

Core Insights - The rise of GLP-1 agonists presents a significant investment opportunity in the healthcare sector, particularly for financial advisors to discuss with clients as weight loss resolutions gain attention in 2026 [1] - Weight loss ETFs are being evaluated by advisors to capitalize on the thematic shift in the market [1] Group 1: Weight Loss ETFs Overview - The Amplify Weight Loss Drug & Treatment ETF (THNR) tracks the VettaFi Weight Loss Drug & Treatment Index, focusing on companies involved in GLP-1 agonists and alternatives [2] - THNR has a net expense ratio of 0.59% and its top 15 holdings account for over 90% of the portfolio, ensuring alignment with the index [3] - The Roundhill GLP-1 & Weight Loss ETF (OZEM) employs an active management strategy, allowing for adjustments based on real-time data from clinical trials and FDA updates [4] Group 2: Portfolio Management and Performance - As of January 9, both OZEM and THNR share the same top two holdings, Novo Nordisk and Eli Lilly, with a 61% portfolio overlap, indicating a potential preference for a passive approach in this sector [5] - The Tema Heart & Health ETF (HRTS) offers a broader perspective by including treatments for diabetes and cardiovascular diseases, managed by Dr. David Song [6] - HRTS typically holds around 45 companies, providing a more diversified portfolio but has a higher net expense ratio of 0.75% and is underperforming compared to THNR and OZEM as of January 9 [7] Group 3: Investment Opportunities - Weight loss ETFs are seen as a compelling opportunity for investors to leverage the long-term growth in the obesity drug market, potentially serving as high-return satellite positions in investment portfolios [9]

Core Insights - Novo Nordisk's CEO Mike Doustdar highlighted that up to 1.5 million patients in the U.S. may be using compounded versions of GLP-1 drugs, indicating a significant market for cheaper, unapproved alternatives [1] Company Summary - The mention of 1.5 million patients suggests a substantial demand for GLP-1 drugs, which are known for their effectiveness in treating conditions like obesity and diabetes [1] - The existence of compounded versions points to a potential challenge for Novo Nordisk, as these alternatives may impact the sales of their approved products [1] Industry Summary - The trend of patients opting for compounded drugs reflects broader issues in the pharmaceutical industry regarding drug pricing and accessibility [1] - The rise of unapproved alternatives may lead to increased scrutiny and regulatory discussions surrounding the approval processes for such medications [1]

Group 1: Fundsmith Equity Fund Performance - Fundsmith Equity Fund's T Class Accumulation shares returned 0.8% in 2025, underperforming the MSCI World Index which returned 12.8% [1] - Since inception, the fund has outperformed the index by 1.7% per annum [1] - The underperformance in 2025 is attributed to index concentration, growth of assets in Index Funds, and weakness in the dollar [1] Group 2: Novo Nordisk A/S Overview - Novo Nordisk A/S had a one-month return of 16.76% but lost 30.50% of its value over the last 52 weeks [2] - As of January 9, 2026, Novo Nordisk A/S stock closed at $58.81 per share, with a market capitalization of $263.8 billion [2] - Fundsmith Equity Fund expressed concerns about Novo Nordisk's market position and its failure to prevent illegal generic competition in the US market [3] Group 3: Analyst Insights on Novo Nordisk A/S - Berenberg lowered the price target for Novo Nordisk A/S to DKK 400 while maintaining a Buy rating [4] - The stock is not among the 30 Most Popular Stocks Among Hedge Funds, with 50 hedge fund portfolios holding it at the end of Q3, up from 45 in the previous quarter [4] - Analysts suggest that certain AI stocks may offer greater upside potential and less downside risk compared to Novo Nordisk A/S [4]

Core Viewpoint - The performance of Fundsmith Equity Fund in 2025 was disappointing, with an annual increase of only 0.8%, significantly lagging behind the MSCI World Index, which rose by 12.8% [2][11]. Performance Overview - Fundsmith Equity Fund's cumulative return since inception is 612.9%, with an annualized return of 13.8%, outperforming the MSCI World Index by 1.7 percentage points [10][11]. - The Sortino Ratio for Fundsmith is 0.75, indicating a higher return per unit of downside risk compared to the index's 0.48 [11]. Key Factors Affecting Performance - **Concentration of Index**: The dominance of a few large tech stocks, referred to as the "Seven Giants," has significantly influenced market returns, with the top ten stocks contributing 50% of the S&P 500's total return by the end of 2025 [16][19][22]. - **Growth of Index Fund Assets**: The expansion of passive index funds has created a momentum effect, where funds are automatically allocated to the highest-weighted stocks, further driving up their prices [24][26][28]. - **Weakening Dollar**: The dollar weakened against the pound in 2025, impacting the performance of Fundsmith, which primarily invests in U.S. companies [34]. Notable Holdings - **Novo Nordisk**: This stock was the largest detractor from performance, with a nearly 40% decline in 2025, attributed to execution and governance failures rather than the product direction [3][4][5][41]. - **Top Contributors**: Alphabet, IDEXX, Philip Morris, Meta Platforms, and Microsoft were the top contributors to the fund's performance in 2025, with Alphabet making its first appearance on the list [45][46]. Investment Strategy - The company maintains a three-step investment strategy: buy good companies, avoid overpaying, and do nothing [48]. - The focus remains on holding high-quality companies with sustainable growth, as evidenced by a 16% increase in free cash flow across the portfolio [53]. Changes in Portfolio - The company sold positions in Brown-Forman and PepsiCo due to concerns over the impact of weight-loss drugs on consumer behavior, while initiating positions in Zoetis, EssilorLuxottica, Intuit, and Wolters Kluwer [64][66]. Conclusion - The company aims to continue holding a portfolio of high-quality businesses, expecting that solid fundamentals will eventually reflect in better stock performance and long-term fund results [67].

Investment Rating - The report indicates a positive investment outlook for the pharmaceutical sector, with the overall performance of the Shenwan Pharmaceutical and Biological Index increasing by 7.8% during the week, outperforming the Shanghai Composite Index which rose by 3.82% [2][3]. Core Insights - The pharmaceutical sector's overall valuation stands at 30.6 times earnings, ranking 10th among 31 Shenwan primary industries [5]. - The report highlights significant developments in the long-term care insurance system transitioning from pilot programs to full establishment during the 14th Five-Year Plan, with coverage reaching nearly 300 million people and fund expenditures exceeding 100 billion yuan by the end of 2025 [11]. - Notable advancements in drug commercialization include the launch of Novo Nordisk's oral GLP-1 weight loss drug Wegovy in the U.S., with monthly costs ranging from $149 to $299 for self-paying patients [13][14]. - Moderna has submitted a New Drug Application (NDA) for its seasonal flu vaccine mRNA-1010, showing promising efficacy results in clinical trials [15]. - Arrowhead has reported positive mid-stage results for its RNAi therapies ARO-INHBE and ARO-ALK7, demonstrating significant reductions in visceral and liver fat [16][17]. - GSK's hepatitis B drug Bepirovirsen has shown statistically significant functional cure rates in its Phase III trials [18]. - Recent approvals for innovative drugs in China include BeiGene's BCL-2 inhibitor and Sanofi's APOC3 siRNA drug, which addresses familial chylomicronemia syndrome [19][21]. Summary by Sections Market Performance - The Shenwan Pharmaceutical and Biological Index increased by 7.8%, ranking 6th among 31 Shenwan primary industries [2][3]. - Various sub-sectors showed positive growth, with medical devices and medical outsourcing leading with increases of 10.8% and 11.1%, respectively [5]. Industry Dynamics - The long-term care insurance system is set to expand significantly, with a focus on providing care for the elderly and disabled [11][12]. - The report emphasizes the importance of innovation in drug development, particularly in RNAi therapies and small nucleic acid drugs, which are gaining traction in clinical settings [16][18]. Company Developments - Significant partnerships and collaborations are highlighted, such as the $8.88 billion research collaboration between Insilico Medicine and Servier focusing on oncology [20]. - The report notes the successful commercialization of several new drugs, including BeiGene's and Sanofi's recent approvals, which are expected to impact market dynamics positively [19][21]. - The establishment of new companies and subsidiaries, such as the brain-computer interface subsidiary by Xinwei Medical, indicates a strategic shift towards innovative technologies in healthcare [22].

Investment Rating - The report maintains a positive outlook on the pharmaceutical industry, indicating a "Buy" rating based on recent market performance and emerging opportunities in innovative drug development [2][3]. Core Insights - The pharmaceutical sector saw a significant increase, with the Shenwan Pharmaceutical and Biological Index rising by 7.8%, outperforming the Shanghai Composite Index, which increased by 3.82% [2][3]. - The report highlights the ongoing commercialization of innovative drugs, including the oral GLP-1 medication Wegovy by Novo Nordisk, and the successful clinical trials of various RNAi therapies [11][13][18]. - The establishment of a comprehensive long-term care insurance system in China is expected to enhance the healthcare landscape, potentially benefiting the pharmaceutical sector [11][12]. Market Performance - The Shenwan Pharmaceutical and Biological Index ranked 6th among 31 Shenwan first-level sub-industries, with various sub-sectors showing positive growth, such as medical devices (+10.8%) and medical research outsourcing (+11.1%) [2][5]. - The overall valuation of the pharmaceutical sector stands at 30.6 times earnings, ranking 10th among 31 Shenwan first-level industries [5][10]. Recent Key Events - The report notes the successful approval and commercialization of several new drugs, including BeiGene's BCL-2 inhibitor and Sanofi's APOC3 siRNA drug, which address significant medical needs [20][22]. - Collaborations in drug development are highlighted, such as the $8.88 billion partnership between Insilico Medicine and Servier focusing on oncology [21]. - The report emphasizes the potential of the brain-computer interface industry, with companies like Mindray Medical and Lepu Medical making strides in this area [24]. Investment Opportunities - The report suggests focusing on domestic innovative drug companies and CROs, particularly those involved in the development of small nucleic acid drugs and brain-computer interface technologies [2][11]. - Specific companies to watch include Tigermed, WuXi AppTec, and Innovent Biologics, which are positioned to benefit from the recovery of the innovative drug sector [2][11].