Dealmaker’s Diary: This $326B Pharma Giant’s 50% Crash Creates a 60% Profit Opportunity

Alpesh Patel|June 26, 2025

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Everyone sees the 50% decline and runs for the hills.

I see the numbers and start calculating position sizes.

This Danish pharmaceutical powerhouse didn’t become a $326 billion company by accident. It’s dominated diabetes treatment for decades, building the kind of economic moat that competitors dream about.

Now its revolutionary weight-loss drugs are creating an entirely new market category – one where they currently hold a near-monopoly position.

The recent selloff? Pure market overreaction. Competition fears, Middle East tensions, patent concerns – all the wrong reasons to sell a company with fundamentals this strong.

Here’s the real story… this company is expanding into markets representing billions of potential patients who’ve never had access to these treatments.

The India market opening alone could add $50 billion in addressable market opportunity.

When a company this dominant drops 50% on sentiment rather than fundamentals, smart money starts accumulating.

Click on the image below to see why this weight-loss revolution selloff could make contrarian investors very wealthy.

Transcript

Hi friends, welcome to my Dealmaker’s Diary and the Stock of the Week.

It is Novo Nordisk, and you might think, “Wait a minute, this has dropped about 50% in the past year,” and therein lies the clue. You might also think with everything going on in the Middle East, “Are you sure you want to go with a pharmaceuticals company?” I don’t go on geopolitics.

I don’t go on macroeconomics. I go on the numbers of the company. So let’s look at some of that, shall we?

It’s a company you will obviously be familiar with, famous for its weight loss drugs as things stand. We’re not getting any thinner, and they’ve just opened up the Indian market.

That’s not what I care about so much, because that’s the narrative and that’s the story. I need to see numbers. I need to see consistent delivery, and this is a $326 billion company. This is phenomenal. They can buy themselves out of trouble if need be, but let’s dive a bit deeper into the numbers. Before I do that, I always like, as you know, to go through the AI aspect of these companies because I think it allows us to learn a lot about what’s going on in the world, but also we want to make sure these companies are using AI. And if we come up with a blank, then we should get a bit worried.

Obviously, on drug delivery acceleration, they’re using artificial intelligence. We know this about the pharmaceutical industry. Clinical trial optimization – that should lead to greater efficiency, lower costs, quicker-to-market drugs, better drugs, more effective drugs, more drugs.

They’re using AI for regulatory writing. I’m less concerned about that, obviously.

AI-enhanced data management – I’d expect that in the back end and operational efficiencies and more automation. Obviously, they’re a big company. They need to use it for fostering innovation and equally importantly, getting talent into the company. It is a race for talent when you’re that big.

Let’s have a look at my proprietary indicator, which is the growth value income rating that looks at the valuation of a company, the revenue growth of a company and dividend yields.

This is a seven out of 10. So it meets my minimum requirements.

You’re only paying $18. This is a tech company, an AI-rich tech company.

You’re only paying $18 for every future dollar of expected profits. That’s cheap despite its historic levels and by pharmaceutical industry standards and certainly by tech levels. Cash return on capital invested – we don’t have that. It’s a foreign-based company but listed and buyable through the U.S., but that sometimes means we can’t get all the accounting data. We don’t have the cash return on capital invested number.

Sortino ratio – that’s fine. Your average returns to downside volatility, I can live with 0.31. I’d prefer it above one, but it’s fine. Volatility below 20% – fine.

Good. Let’s dive a bit deeper into the numbers. You can see this massive drop that’s happened, partly because after such a massive rise, partly because of competition from Eli Lilly, effectiveness of drugs and the market overreacting, being fearful when it didn’t need to be.

It now seems to have very much bottomed out and is starting to rise. Momentum on the weekly and the monthly charts is likely to continue to the upside, so I like it on that basis.

And on a discounted cash flow basis, it’s 60% undervalued, which ties in with what we said earlier – that were it to continue upward, $181 does seem closer to fair value.

It might not happen in a year; it might take a bit longer than that.

I think we should be able to wait. Thank you very much.