Why Ozempic shouldn't ruin an appetite for CSL shares

Could CSL be immune to Ozempic's expanding range of uses.

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The CSL Ltd (ASX: CSL) share price is sliding lower on Monday as management tries to clear the air.

Feeling the squeeze, shares in the biotech heavyweight are down 0.6% to $239.93 amid the company's capital markets day. The briefing to investors and analysts is a whole day's affair to provide more in-depth insights across the different divisions of CSL.

One statement during this morning's proceedings was directed at worries regarding how weight-loss drugs, such as Ozempic, might eat into CSL's kidney disease business (CSL Vifor).

Disruption afoot?

On Thursday last week, CSL shares took a nasty 6.3% tumble after Novo Nordisk hinted at possible kidney benefits resulting from the use of glucagon-like peptide-1 (GLP-1) medications, such as Ozempic, following a trial involving their injectable semaglutide.

In a swift response, investors applied selling pressure to the Australian plasma behemoth due to its exposure to treating chronic kidney disease and related illnesses through its Vifor acquisition. As a result, the CSL share price gave way to a new 52-week low.

Today, CSL CEO Paul McKenzie addressed the matter directly, stating:

There's been a lot of talk about GLP-1s […] To give you the punchline, based on the high-level results, we do not see GLP-1s as having a material impact on the business.

Interestingly, the CSL Vifor section of the presentation focused heavily on iron deficiency and patient blood management. Whereas renal disease was a relatively brief mention, contained to a single presentation slide.

CSL Vifor general manager Hervé Gisserot reinforced the view that GLP-1s are not a concern. Specifically, Gisserot said, "In our view, as already stated by Paul, the renal disease market won't be disrupted by GLP-1."

Brokers still keen on CSL shares

Some brokers have come forward with updates on CSL shares following the news from Novo Nordisk. Much like management, these brokers have not been scared away from the vaccine and plasma powerhouse amid the developments in GLP-1s.

Firstly, analysts at Citi have retained their buy rating and a $325 price target. The team highlighted that CSL as a group only derives approximately 7% of its revenue from the nephrology area of its business.

Secondly, UBS analyst Sujit Dey estimates Vifor to constitute roughly 15% of group revenue. Yet, even at a higher estimate, Dey believes the $7 billion wiped from CSL's market capitalisation exceeds the maximum possible impact in the event of disruption.

As of today, CSL shares are down 15.2% since the beginning of 2023.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Novo Nordisk. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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