5 Weight Loss Drug Stocks to Watch as Ozempic, Zepbound Increase Sales

Treating America’s obesity epidemic is becoming big business. Two pharmaceutical companies, Eli Lilly ( LLY ) and Novo Nordisk ( NVO ), are leading the weight loss revolution with a new class of drugs known as GLP-1 agonists.

Rising revenues and growing excitement have led some analysts to compare the success of GLP-1 drugs in the health and wellness market to the rise of artificial intelligence in the tech industry.

The increase in GLP-1 drugs

Drugs such as Novo Nordisk’s Ozempic and Eli Lilly’s Zepbound have taken the market by storm, not only because of their effectiveness in weight management, but also because of the significant boost they have given to company share prices .

The boom is fueled by a class of drugs known as GLP-1 agonists. GLP-1 is a natural hormone in the body that is produced after eating, helping your body manage blood sugar, regulate insulin, and curb hunger while slowing digestion. GLP-1 agonists bind to GLP-1 receptors in the body, mimicking the effects of the hormone.

The first GLP-1 drug was Byetta (exenatide), approved in 2005 for type 2 diabetes. Almost five years later, Novo Nordisk introduced Victoza (liraglutide), another GLP-1-based diabetes drug human In 2014, liraglutide became the first GLP-1 drug approved for weight management in the US

However, the real turning point came about two years ago when Novo Nordisks semaglutide (marketed as Ozempic for diabetes and Wegovy for weight loss) revolutionized the field. Unlike its predecessors, semaglutide only required weekly injections, instead of a daily or twice-daily dose.

Unlike many other weight loss medications, GLP-1s have shown consistent positive results in clinical trials. The lack of readily available and effective weight loss alternatives makes GLP-1 an outstanding choice with millions of potential customers in the United States alone.

The American Association for the Advancement of Science named GLP-1 drugs as the scientific breakthrough of 2023, noting that these treatments are reshaping medicine, popular culture and even global stock markets.

GLP-1s generate revenue, boost stocks for pharmaceutical companies

The success of GLP-1 drugs has increased investor interest in big pharmaceutical companies.

As the first company to widely market and distribute GLP-1 drugs, Novo Nordisk has seen its share price rise 137 percent in just two years, from $53 per share in May 2022 to $126 in May 2024 The company also posted sales growth of $36. percent by 2023.

Novos’ market value is now greater than the gross domestic product of its home country, Denmark.

The story continues

But Eli Lilly, the Indianapolis-based drug company and fellow diabetes drug maker, was not far behind. Zepbound, its drug to treat chronic obesity, was approved by the FDA in November 2023.

Eli Lilly’s revenue rose 25 percent in the first quarter of 2024 compared to the same time last year. It is now one of the best performing stocks in the S&P 500.

Eli Lilly raised its full-year guidance during its May 1 earnings report and expects full-year adjusted earnings of $13.50 to $14 per share, compared with ‘previous guidance of $12.20 to $12.70 per share.

LLY’s stock traded at about $776 on May 8. The company’s 0.7 percent dividend yield only sweetened the deal for many investors.

Neither company shows signs of slowing down. In February, Novo Nordisk announced plans to acquire three manufacturing facilities to meet demand for its blockbuster drugs. Eli Lilly is also scrambling to ramp up supply, with seven manufacturing sites being ramped up or under construction.

Other weight loss drug company actions to watch

As shares of Novo Nordisk and Eli Lilly rise, some investors are looking to other drug companies with promising new weight-loss drugs.

It’s quickly becoming a crowded field as investors hope to find an undervalued gem with moonshine potential.

Here are other competitors in the expanding weight loss drug market.

Amgen (AMGN)

Shares of biopharma giant Amgen ( AMGN ) rose on May 3 after the company reported positive results from mid-phase trials of its investigational obesity drug, MariTide.

MariTide has a potential advantage over competitors in terms of user experience: patients would use a hand-held autoinjector only once a month, or even less often. This could be a game changer compared to the weekly injections required by the current market leaders, Wegovy (Novo Nordisk) and Zepbound (Eli Lilly).

However, detailed data from this mid-phase trial is not expected until later this year, and the drug could take several years to reach the market.

On May 8, Amgen shares rose to $305, up from $230 per share in May 2023.

Viking Therapeutics, Inc. (VKTX)

Viking Therapeutics does not currently manufacture any weight-loss drugs, but its lead candidate, VK2809, is in phase two trials.

In addition to its experimental weight-loss injection drug, Viking also plans to start a phase two trial of a once-daily oral weight-loss pill later this year.

VKTX has experienced significant growth in the past two years. On May 8, the stock was trading at about $79, up from about $22 two years ago.

VKTX could be an attractive buy for investors looking for a high-risk, high-reward opportunity. Viking Therapeutics’ future growth potential depends on the success of VK2809. If approved, it could become a major player in the weight management market.

AstraZeneca (AZN)

AstraZeneca, a British pharmaceutical company, first tried to develop its own oral GLP-1 drug in-house. The company eventually abandoned the project in favor of licensing an experimental weight loss pill from a Chinese company called Eccogene in November 2023.

This new drug, which is still in clinical trials, has the potential to cause fewer side effects than current injectable treatments.

AstraZeneca paid $185 million upfront to license the drug and agreed to invest up to $1.8 billion more to fund future clinical, regulatory and marketing milestones.

The company abandoned two other development programs, including phase two trials of a sickle cell drug, to free up resources for development of its anti-obesity drug.

While AstraZeneca is betting big on its newly licensed drug, the product is still in early trials, putting the company at a disadvantage against its competitors. AstraZeneca shares hit $76 on May 8 and haven’t moved much in a year.

looking ahead

Investors are bullish on weight loss drugs and the companies that make them. Analysts also see huge growth potential.

JP Morgan Research predicts that the GLP-1 market will exceed $100 billion by 2030, and total GLP-1 users in the U.S. could reach 30 million by the end of the decade by about 9 percent of the total population.

Meanwhile, Goldman Sachs predicted in February that these new weight-loss drugs could boost US gross domestic product by 1 percent in the coming years.

It’s impossible to predict which companies will develop the most effective and safest GLP-1 drugs over time, which only adds to investor uncertainty and excitement about future earnings.

Editorial Disclaimer: All investors are encouraged to do their own independent research on investment strategies before making an investment decision. Investors are further advised that the past performance of investment products is not a guarantee of future price appreciation.