Novo Nordisk more valuable than GlaxoSmithKline? That's what investors say

August 5, 2014 | By Tracy Staton

Who'd have thought Novo Nordisk ($NVO) could zoom past GlaxoSmithKline ($GSK) in the pharma market value rankings? Predictable or not, that's just what's happened. As Bloomberg reports, Novo shares are up 27% this year, pushing its market cap to $120 billion, several billions past Glaxo's.

Blame Glaxo's struggles with Advair competition, which prompted GSK to discount the drug, and its damaged credibility in China, where corruption allegations continue to depress sales. The U.K.-based drugmaker lowered its 2014 forecast when it announced earnings--and falling Advair sales--July 23. Investors dumped their shares, causing the biggest weekly drop in share price since 2008, Bloomberg says.

Meanwhile, at Novo, sales continue to grow, albeit at a slower pace than in the past. With the worldwide diabetes market mushrooming, the company is expected to continue growing along with it. Novo is well entrenched in emerging markets, where growth in diabetes is enormous. Its 2014 sales forecast amounts to $15.8 billion, up from $14.8 billion last year.

And that's despite some setbacks of its own, including Express Scripts' ($ESRX) barring two top Novo treatments, Victoza and NovoLog, from its 2014 national formulary. According to the pharmacy benefits manager's newly released 2015 version, that's not going to change next year. Increasingly strict payers could limit Novo's ability to raise its prices as time goes on.

Even so, Novo is expected to enjoy the upward ride through 2020. "Advair pricing has started to spiral downwards," Barclays analyst Mark Purcell told the news service. "Novo will continue to outpace Glaxo in terms of sales growth through to the end of the decade."

By then, Novo hopes to have several new products on the market, including its next-gen diabetes treatment Tresiba, which was rejected by the FDA last year. Another hopeful: A version of liraglutide aimed at treating obesity. Among others there's a long-acting hemophilia drug, part of a wave of new treatments for the bleeding disorder. To prep for all that, the company is planning to recruit another 6,000 employees for R&D and production in Denmark.