Novo Nordisk's share price may grow again as a result of this significant development.

Novo Nordisk (N)ovo Nordisk ) (NYSE: NVO)The company has become one of the world's most valuable healthcare stocks, thanks to two remarkable medicines - Ozempic and Wegovy - which consumers have been using to help lose weight, even though the former is a diabetes medicine and the latter is approved for weight loss. The efficacy of these two medicines has created a huge demand for them, which has enabled Novo Nordisk to achieve phenomenal growth in sales and profits in recent years.

It is fair to say, however, that the company's performance has been less than satisfactory because of constraints on both demand and supply. Novo Nordisk is investing billions of dollars in additional capacity and is working with the manufacturers of carbs to help increase the supply of these medicines. On the demand side, not everyone who wants these drugs can afford them.

The good news is that medication insurers are starting to warm up to the idea of providing coverage for these medications. Let's see what this means for the company's stock and its investors.

Wegovy will be covered by several Medi-Cal insurance companies.

according toThe Wall Street Journal.It has been reported that a number of US health insurance companies will be offering Wegovy insurance to patients with health insurance. These includeCVS Health,Elevance Health This means that there will soon be a huge influx of new demand for Wegovy, a drug for which out-of-pocket costs can exceed $1,000.

It is important to note, however, that the coverage will be used to reduce the risk of heart disease and stroke in high-risk individuals who also have a medicare-insured drug plan. Earlier this year, in March, the U.S. Food and Drug Administration (FDA) approved Wegovy for the treatment of heart-related risks after encouraging results in clinical trials of the drug. Therapeutic insurers see benefits in using Wegovy beyond weight loss, giving them even more reason to cover the drug.

Capacity is still an issue.

This is an encouraging development for Novo Nordisk, which will provide even greater impetus to secure more supplies of Wegovy. So far, the biggest challenge has been to produce enough of the drug.

But Novo Nordisk has been working hard to increase production. Last year, Novo Nordisk announced plans to invest $6 billion in Danish plants as part of a multi-year goal to increase capacity. However, some of these plants will not be operational until 2029.

Recently, Novo Nordisk's parent company, Novo Nordisk Holding, announced that it would be acquiring pharmaceutical manufacturerCatalentThe transaction is expected to be finalized by the end of the year. Upon completion of the transaction, Novo Nordisk will have access to several production sites, which will help it to increase its production capacity as early as 2026.

In the short term, Novo Nordisk has been using a number of carry manufacturers, Catalent being one of them, to help fulfill orders. Until capacity increases, Novo Nordisk may need to rely further on this approach. Now, with demand likely to rise further in the near term, Novo Nordisk may have a greater need to secure additional supply.

Strong sales, could go to the next level

While Novo Nordisk will face challenges in the future, not having enough supply to meet surging demand could be a good problem to have-especially if the company has a plan to beef up its supply. Novo Nordisk seems to have such a plan.

Last year, Novo Nordisk achieved impressive results, with total gross revenues of DKK 232.3bn (approx. USD 34.8bn), an increase of 36% excluding exchange rate effects, and a net profit of DKK 83.7bn (approx. USD 12.6bn), an increase of 51%.

Novo Nordisk's sales and profits are soaring, thanks to the growing popularity of Wegovy and Ozempic. This month, retail giantCostco WholesaleThe company began offering Ozempic and other popular weight-loss medications through Sesame, a direct-to-consumer healthcare marketplace.

By making these medicines more accessible, Novo Nordisk's impressive numbers could be even better in the future. While increasing supply may be a challenge, the company is currently in a very strong position.

Should you invest in Novo Nordisk?

Novo Nordisk is a great healthcare company to invest in. While its valuation does not look cheap, as its stock trades at 46 times its trailing earnings, there is plenty of room for long-term growth ahead.

Considering the huge opportunities in the weight loss market, the company has the potential to become a trillion dollar stock. If you are a long-term investor who is willing to buy and hold for many years, Novo Nordisk may be an ideal stock for your current portfolio.

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David Jagielski does not own any of the stocks mentioned above.The Motley Fool holds a recommendation for Costco Wholesale.The Motley Fool recommends CVS Health and Novo Nordisk.The Motley Fool has a disclosure policy.

Novo Nordisk shares may grow again on this major development was originally published by The Motley Fool.