Key points
- Novo Nordisk and Nvidia have announced an innovative partnership aimed at developing supercomputers focused on pharmaceutical and healthcare applications.
- The project involves building a supercomputer in Denmark using Nvidia’s DGX SuperPOD and other Nvidia equipment focused on artificial intelligence.
- Eli Lilly, Novo Nordisk’s rival in the weight loss category, is working with China-based XtalPi to accelerate drug discovery and development using artificial intelligence.
- 5 titles we prefer to NVIDIA
Two of the year’s biggest investment themes, artificial intelligence and anti-obesity drugs, are finally coming together, Novo Nordisk A/S says NYSE: NVO and Nvidia Corp. NASDAQ:NVDA announced a partnership for the development of supercomputers.
In conjunction with Nvidia’s developer conference in March, the Novo Nordisk Foundation said it will build a supercomputer in Denmark using an Nvidia DGX SuperPOD, an AI data center supercomputer. The project will also use other Nvidia devices designed for large-scale AI language modeling.
The Novo Nordisk Foundation has a controlling stake in pharmaceutical giant Novo Nordisk.
The Danish Export and Investment Fund is also an investor in the project, which is designed to help Danish researchers partner with Nvidia teams to collaborate on pharmaceutical and biotech projects, among others.
AI processing power for healthcare applications
“Drug discovery, disease diagnosis and treatment, as well as complex life science challenges, are examples of areas where the extreme computing power of artificial intelligence can enable the positive transformation of our society,” he said Mads Krogsgaard Thomsen, CEO of the Novo Nordisk Foundation, in a statement.
The use of artificial intelligence is nothing new in the pharmaceutical industry.
For example, in 2023, Eli Lilly & Co., NYSE: LLY, Novo Nordisk’s big rival in obesity and diabetes treatments, has teamed up with drug technology specialist XtalPi to identify potential drug candidates. The goal is for Lilly to accelerate the clinical trial and commercialization process.
Other big drugmakers that have joined forces with China’s XtalPi include Pfizer Inc. NYSE:PFE and Johnson & Johnson NYSE:JNJ.
Weight loss and diabetes drugs push stocks higher
Novo Nordisk and Lilly are two of the largest pharmaceutical stocks by market capitalization.
Lilly is the largest pharmaceutical company in the SPDR Health Care Select Sector fund NYSEARCA: XLV. Its recent growth, like that of Novo Nordisk, is due to the success of anti-obesity and anti-diabetes drugs.
Because it is based in Denmark, Novo Nordisk is not part of the S&P 500 index, but its value exceeds that of Johnson & Johnson, Merck & Co. Inc. NYSE:MRK and AbbVie Inc. NYSE: ABBVthe next three largest S&P pharmaceutical stocks, after Eli Lilly.
Optimistic news about the weight loss pill
The race toward better weight-loss drugs has similarities to the race toward faster and better artificial intelligence processing chips. This places not only Nvidia, but also Eli Lilly and Novo Nordisk among the most valuable companies in the world.
On March 7, Novo Nordisk shares rose nearly 9% on upbeat news about clinical trials of the weight-loss pill amycretin. You can see this gap on MarketBeat’s Novo Nordisk chart.
More effective than injectable treatment
Early indications show that amicretin may be more effective than Novo Nordisk’s current blockbuster drug, Wegovy, which is injectable.
Pharmaceutical analysts say that if the pill version of the anti-obesity treatment is more effective than Wegovy, it could also be more effective than the diabetes drug Ozempic, which contains the same ingredient as Wegovy.
Besides, what patient wouldn’t rather take a pill than give himself a shot? Even those who are not afraid of injection would appreciate the added convenience of a drug in pill form.
For its part, Nvidia has made inroads into the healthcare industry, and it’s likely not all will be well received.
Nvidia’s growing focus on healthcare
On March 19, also as part of its developer conference, Nvidia said it was collaborating with a company called Hippocratic AI on technology with the hope of building an emotional connection with patients.
Nvidia has also partnered with AI leader Microsoft Corp. NASDAQ:MSFT promote the use of generative artificial intelligence in healthcare. The partnership is intended to accelerate drug discovery and clinical research, similar to Eli Lilly’s use of artificial intelligence.
In addition to pharmaceutical product development, the healthcare partnership between Nvidia and Microsoft will focus on diagnostic imaging and precision medicine.
Finally, Nvidia announced a partnership with GE HealthCare Technologies NASDAQ: GEHC develop A technologies for ultrasonic applications.
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