For investors, the surge in demand for weight-loss medications is about far more than just Novo Nordisk A/S and Eli Lilly & Co. stock prices.
The issue on the minds of many fund managers is what other stocks and sectors stand to benefit, despite Novo, the manufacturer of Olympic games, having risen to the top spot as Europe’s largest business by market value. And perhaps even more crucial, who is most likely to lose?
Syringe manufacturer Gerresheimer AG and medicine distributor McKesson Corp. are potential winners, whereas fast food restaurants and beer producers would struggle as a result of shifting dietary trends. A healthy population might result from weight loss therapies, which would increase demand for food components from Novozymes A/S and workout gear from Peloton Interactive Inc.
Virus Increases Production of Medical Glassware at Gerresheimer AG
In the assembly line at a Gerresheimer AG facility in Buende, Germany, are glass vials.
According to Henk Grootveld, head of trends investing at Lombard Odier Investment Managers, “Weight-loss treatments transform the landscape in health care because of the switch towards more preventive interventions.” Given that these medicines decrease hunger, they could potentially have significant effects on consumer and lifestyle trends outside of the healthcare industry.
Drugmakers
Because to the popularity of its Wegovy and Ozempic injectable medications, which belong to the GLP-1 pharmacological class, Novo Nordisk last month overtook Apple as the most valuable corporation in Europe. In anticipation of an anticipated US permission to use its Mounjaro diabetic medication to treat obesity, Eli Lilly’s stock has increased 57% this year. According to Berenberg, the global market for obesity treatments might be worth $85 billion by 2030, with Novo and Lilly’s medications being the main drivers of growth in this era.
Outpacing Pharma Peers on Obesity Improvements, Novo, Lilly Shares
Guide to Navigating Weight Loss
Analysts anticipate greater optimism. With Lilly’s greater potential for sales related to obesity, JPMorgan Chase & Co. raised its projections for Lilly and increased its price objective on the Danish pharmaceutical company’s shares this month.
Other businesses are also working on creating therapies, such as Zealand Pharma A/S and privately held Boehringer Ingelheim GmbH, which are advancing their investigational therapy into a late-stage study. According to Lucy Codrington, an analyst at Jefferies International Ltd., Zealand, whose shares have increased 48% this year, is an “important player” in the “next wave of obesity therapies” and has the potential to be bought.
Some medicine manufacturers have a bigger gap. This year, Pfizer Inc. stopped developing an experimental treatment, but it is still testing another medication that performed better than a placebo in a study.
While Gilead Sciences Inc. is researching a treatment with Novo for nonalcoholic steatohepatitis, a liver condition associated with obesity, Viking Therapeutics Inc. has begun a mid-stage trial. Co-manager of the International Biotechnology Trust Plc, Ailsa Craig, is keeping a watch on Amgen Inc., which is working on a treatment that requires fewer injections than Lilly’s medication. A mid-stage study’s findings are anticipate in 2019.
Guide to Navigating Weight Loss
While it tries to keep up with demand, Novo is producing more medicine than ever before, which is excellent news for suppliers like Catalent Inc., which fills Wegovy pens with clear liquid. According to Reuters, the pharmaceutical company has also hired Thermo Fisher Scientific Inc. to help meet demand. This month, Novo Chief Executive Officer Lars Fruergaard Jorgensen told Bloomberg TV that the company had a policy of keeping client names confidential.
Manufacturers of medical devices
Shares of companies that develop devices to treat sleep apnea, such as ResMed Inc. and Inspire Medical Systems Inc., have suffered as a result of the buzz surrounding obesity therapies. Since research in August that showed Novo’s Wegovy reduced the risk of heart attacks and strokes raised the question of what other medical illnesses would experience a decline in the demand for treatments, the stock market has been heading lower.
The beginning of August, shares of Zimmer Biomet Holdings Inc., which creates knee and hip implants for people with osteoarthritis, have decreased by 12%. Since obesity is a risk factor for osteoarthritis, fewer people may require implants if the obesity rate drops. Even so, GLP-1s will help implant sales in the near future, according to CEO Ivan Tornos, who remarked this month: If their body mass index decreases, a large number of patients who are currently too heavy for implant surgery will be able to have the treatment.
A Dexcom G6 Continuous Glucose Monitoring System has been studied by youngsters since the 1990s.
On the presumption that patients on obesity medications would have a reduce need for insulin pumps, diabetes device manufacturers such as Insulet Corp. and Tandem Diabetes Care Inc. have also been hurt. Yet according to Lombard Odier’s Grootveld, continuous glucose monitoring devices, like those produced by Dexcom Inc. and Abbott Laboratories, could be advantageous because doctors frequently prescribe weight-loss medications together with a program to improve one’s lifestyle.
Although Dexcom has been a “victim,” he suggested that the medical technology company may be better off “in the survivors’ camp.” Dexcom recently informed investors that after beginning GLP-1 medication, more persons on insulin were utilizing a continuous glucose monitoring device than previously. An Abbott representative told Bloomberg News that it’s “quite possible” that weight-loss medications may increase the use of these devices.
Tirzepatide, better known by its brand name Mounjaro, has helped patients lose more than 20% of their body weight in the year since Eli Lilly released trial results, making it the most talked-about and hyped-up medicine in recent memory.
Tirzepatide, better known by its brand name Mounjaro, has helped patients lose more than 20% of their body weight in the year since Eli Lilly released trial results, making it the most talked-about and hyped-up medicine in recent memory.
Guide to Navigating Weight Loss
The birth control pill, the antidepressant Prozac, and the erectile dysfunction medication Viagra are just a few of the pharmaceuticals that have recently joined Lilly’s (ticker: LLY) and Novo Nordisk’s (NVO) pantheon of culture-reshaping drugs. In contrast, shares of Lilly and Novo have risen sharply. With a market value of over $400 billion, each business is currently rank second and third overall in Big Pharma. Given that their revenue is roughly 25% to 30% less than that of market leader Johnson & Johnson (JNJ), which has a market value of $425 billion, that is a clever ploy.
There is little question that semaglutide from Novo and Lilly’s tirzepatide will rank among the best-selling medications of the ten-year period. But now is the time for investors to separate the opportunity from the hype.
The two businesses still face significant risks, such as how well the medications will treat patients, who will pay for them, and potential rivals. There is also the question of whether the exorbitant expectations for the pharmaceuticals are already represented in the firms’ share prices or if there is still an opportunity for growth for anyone wishing to invest in the companies now.
Barron’s advice to navigating this new era of obesity research is provided below.
What makes these medications so novel?
It’s important to note that the two medications we’re discussing—tripeptide from Lilly and Novo’s semaglutide—are both sold under various brand names and formulations depending on the illness they are meant to treat.
Semaglutide is market by Novo under the brand names Ozempic (injection for Type 2 diabetes), Wegovy (injection for obesity), and Rybelsus (pill for Type 2 diabetes).
The only form of Lilly’s tirzepatide that is now available for purchase is an injectable called Mounjaro. Yet, the business will probably soon be able to add a fresh name to its marketing roster: Tirzepatide caused Type 2 diabetes patients to lose 15.7% of their body weight, according to study findings published in late April. If everything goes according to plan, the FDA might approve the medicine as a treatment for obesity as soon as this year’s end, according to Lilly.
