Weight-Loss Drug Craze: The Potential Winners and Losers

Analysts Notebook joined discussion · Sep 6, 2023 18:21

Weight-loss drug stocks are the big winners in the market as investors got clear evidence that these drugs could be a game-changer for the pharmaceutical industry. While other companies—including those outside of healthcare—could feel a more negative impact.

Source: Koyfin

Morgan Stanley anticipated annual global sales for weight-loss drugs could reach $77 billion by 2030, higher than its previous $54 billion forecast. $Novo-Nordisk A/S (NVO.US)$ and $Eli Lilly and Co (LLY.US)$ will split 82% of the market.

Novo Nordisk's stock price has risen 42%, while Eli Lilly has rallied 54% this year.

The weight-loss drugs didn't impact appetite for all foods uniformly. A report released by Morgan Stanley found that anti-obesity medication (AOM) patients consumed more fruit and vegetable, fewer confections, baked goods and sugary drinks. Around three quarters of respondents said they ate out at pizza restaurants less frequently.

Weight-Loss Drug Craze: The Potential Winners and Losers

Morgan Stanley noted this was bad news for confectionery manufacturer and fast food companies such as $Mondelez International (MDLZ.US)$, $Hershey (HSY.US)$, $Domino's Pizza (DPZ.US)$ and $McDonald's (MCD.US)$. Some AOM patients were also foregoing alcohol consumption entirely, which was seen as a headwind for beer brand $Molson Coors Beverage (TAP.US)$. However, the bank thought these drugs could create tailwinds for healthier options such as the salad restaurant $Sweetgreen (SG.US)$.

Healthcare stocks are also under increasing pressure. A study released by Novo Nordisk in August had shown the obesity treatment also had a clear cardiovascular benefit.

The stock market inferred this as bad news for medical device makers as lowering obesity and diabetes burden could impact the growth curves.

Shares in $ResMed (RMD.US)$ fell nearly 20% on the news, while the market cap of other major medical device makers – $Inspire Medical Systems (INSP.US)$, $DexCom (DXCM.US)$ and $Intuitive Surgical (ISRG.US)$ – slid by up to 10%.

Here are the potential winners and losers mentioned by Goldman Sachs and Morgan Stanley.

Source: Morgan Stanley, Barron's, AFR

Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more

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Neos11 : untapped

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William LEW : wow! It's been less than half a year since the hype on the subject of AI artificial intelligence is on the rise, and Wall Street is about to turn the tide of “medicine products”. If every retail customer follows suit, then let's see when they will sell “regret medicine” for them to eat.

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