Are Weight Loss Stocks Expected to Take Over from AI as the New US Stock Hotspots in 2023?
Following a decline in the excitement surrounding AI, there has been a noticeable increase in discussions about weight-loss drugs such as Ozempic, Wegovy, and Mounjaro. Bloomberg data indicates that this quarter's earnings calls have revealed over two times the number of mentions of "GLP-1" compared to the same period last year. Not only pharmaceutical companies, but also beauty firms, medical device manufacturers, and health-related institutions have referred to the new drugs.
Given the surging mentions, could weight loss drugs be the next investment hotspots in the US stock market in 2023?
GLP-1 receptor agonists are first created and used to lower blood sugar levels in individuals with type 2 diabetes. They also have been found to suppress appetites and lead to significant weight loss. Some GLP-1 drugs are marketed as treatments for both diabetes and obesity. As an illustration, both Ozempic (diabetes drug) and Wegovy (obesity drug) contain semaglutide, a type of GLP-1.
According to Morningstar, the global obesity market is expected to reach approximately $60 billion by 2032, with an estimated 21 million individuals worldwide taking GLP-1 products.
Morgan Stanley has revised up its forecast for annual sales of weight-loss drugs from $54 billion to $77 billion by 2030, attributing this to a surge in demand caused by a social media phenomenon and a shortage of supply.
James van Geelen from Citrinitas Capital said, "If GLP-1 drugs have a 30% penetration rate in the obese population, the obesity rate in the United States would be lower than it was in 1997. And that could happen over the course of two or three years."
Some Wall Street hedge fund managers believe that GLP-1 has the potential to usher in a transformative change akin to that of AI, with far-reaching implications across various sectors, ranging from clothing retail and dating to fast food restaurants.
Danish drug maker $Novo-Nordisk A/S (NVO.US)$'s GLP-1 receptor agonist, Wegovy, has already received approval in the U.S. for the treatment of obesity. According to a recent large-scale trial, Wegovy exhibited remarkable efficacy in reducing major cardiovascular events such as heart attacks and strokes by 20%. The company raised its 2023 sales forecast to up to 33 per cent growth from the previous 30 per cent growth, as strong demand for diet pills drove sales growth.
$Eli Lilly and Co (LLY.US)$ is joining the fray with its GLP-1 agonist, Mounjaro (also known as tizapeptide), which has been granted approval for diabetes treatment. A recent study indicates that Mounjaro may be a more effective weight loss solution than Wegovy. The company aims to launch Mounjaro as an obesity treatment by year-end.
$Amgen (AMGN.US)$ is making rapid progress in the development of AMG-133, an anti-obesity compound that incorporates a GLP-1 agonist.
$Pfizer (PFE.US)$ has recently placed a high priority on advancing danuglipron, its oral GLP-1 receptor agonist that is currently undergoing Phase 2 clinical trials for obesity and diabetes treatment.
$Viking Therapeutics (VKTX.US)$ anticipates the progression of its VK2735, a dual GIP and GLP-1 receptor agonist, to Phase 2 clinical trials for obesity treatment during this year.
"We expect new therapies launching beginning in 2026 from firms including Amgen and Pfizer could grow to roughly one-quarter of the market by 2032," Morningstar said.
Source: Diatribe, SeekingAlpha, Bloomberg
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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