January 2025: LVMH Retakes Europe’s Top Spot in Market Cap

1. Background and Key Points

• French luxury goods giant LVMH (Louis Vuitton Moët Hennessy) has reclaimed its position as the most valuable company in Europe by market capitalization.
• Competitor Novo Nordisk of Denmark, boosted by its flagship products, the weight-loss drug ‘Wegovy’ and diabetes treatment ‘Ozempic’, had seen consistent growth. However, recent setbacks in clinical trial results and price reduction pressures from the U.S. government have impacted its performance.
• As of January 17th, LVMH’s market cap reached €345.3 billion (approximately ₩517 trillion), while Novo Nordisk’s stood at €344.5 billion (approximately ₩516 trillion), reversing their rankings.

2. Reasons for LVMH’s Surge

• 2.1 Factors Driving Share Price Increase
  • LVMH’s stock price surged by approximately 7.5% last week.
  • This is primarily attributed to growing expectations of a global luxury goods demand recovery.
• 2.2 Positive Performance by Richemont (Competitor)
  • LVMH’s competitor, Swiss-based Richemont, reported remarkable performance in Q4 of the previous year.
  • Richemont, owner of Cartier, saw this growth mainly driven by a recovery in demand in the U.S. market.
  • This performance has increased investor expectations for a positive rebound in the luxury market in 2025.
• 2.3 Impact of the Chinese Market
• While China’s economic downturn negatively impacted the luxury industry through 2024, stimulus measures in 2025 are showing signs of improvement.
• This, coupled with increased demand for luxury goods in the U.S. and Europe, has positively influenced LVMH’s performance.

3. Factors Contributing to Novo Nordisk’s Decline

• 3.1 Underperformance of Products
  • The new product ‘Cagrisema’ fell short of expected weight loss efficacy (at least 25%), achieving only 22.7%, which disappointed the market.
  • This did not create a significant differentiation from competitor Eli Lilly’s weight loss drug ‘Mounjaro’.
• 3.2 Pressure from U.S. Government on Drug Pricing
  • The U.S. Centers for Medicare & Medicaid Services (CMS) included ‘Wegovy’ and ‘Ozempic’ on a list of 15 drugs targeted for price reductions.
  • Novo had already experienced price cuts between 38-79% in Medicare programs last year.
  • The results of the new price negotiations will take effect from 2027, negatively affecting long-term revenue models.
• 3.3 Sharp Decline in Market Cap
• Due to poor performance and news of drug price negotiations, Novo Nordisk’s market capitalization dropped by €90 billion in a single day.

4. Luxury Goods and Healthcare Markets: Present and Future

• 4.1 Future of the Luxury Goods Market
  • The global luxury goods market is primarily driven by demand from China and the U.S.
  • With the expected global economic recovery in 2025, luxury consumption is predicted to increase.
  • LVMH, particularly strong in jewelry, fashion, and beauty, is likely to maintain its attractiveness to investors.
• 4.2 Challenges in the Healthcare Market
  • Intensified competition in the weight-loss drug market.
  • The ranking among pharmaceutical companies is expected to fluctuate further depending on successful development of new, effective drugs.
  • U.S. government regulations are expected to significantly impact the long-term profitability and stock prices of healthcare companies.

5. Key Summary and Implications

1. LVMH’s Growth Drivers
   • Recovery in luxury goods demand and robust sales performance in global markets have driven the upward trend.
   • The economic recovery in China and growth in developed markets are also seen as positive factors.
2. Challenges for Novo Nordisk
   • Shortfall in new treatment expectations and price negotiation pressures have created market uncertainties.
   • Future product innovation and cost efficiencies are key factors determining success.
3. Lessons for Investors

• The luxury industry is sensitive to global economic conditions and consumer spending power, so it is necessary to pay close attention to market trends.
• The healthcare industry can experience extreme volatility due to regulations, innovation, and the success of R&D, resulting in both explosive growth and decline.

In conclusion, LVMH has solidified its position as a leader in the global luxury market, earning the trust of investors, while Novo Nordisk needs to improve in areas such as new drug development and regulatory response.

*Source URL:
https://n.news.naver.com/article/014/0005297477?sid=101