Wall Street analysts can barely keep up with the pace of the diabetes and weight loss drug markets — and for good reason.
Thanks to ample customer demand, production increases and an improving global supply chain for drug transport and delivery, the worldwide diabetes and weight loss drug market is expected to grow to $150 billion by 2032, according to BMO Capital Markets. That forecast displaces earlier sector growth estimates, as Goldman Sachs had estimated the weight loss drug market to reach $100 billion by 2030.
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There’s certainly a market for what obesity drug makers are offering.
The U.S. Centers for Disease Control and Prevention reports that 2 in 5 U.S. adults have obesity. The numbers are sobering: 41.9% of U.S. adults are considered obese, and 9.2% are considered highly obese. Many studies also point to the direct link between obesity and serious diseases like diabetes, heart disease and cancer.
So far, the results from weight loss drugs are promising for overweight Americans. That’s also good news for sector stocks, as companies like Novo Nordisk A/S (ticker: NVO), Eli Lilly and Co. (LLY) and Amgen Inc. (AMGN) are cleaning up with their obesity-fighting drugs. How are those stocks and others in the industry faring in 2024? Here’s an inside look:
| Stock | YTD performance* |
| Novo Nordisk A/S (NVO) | 31.3% |
| Eli Lilly and Co. (LLY) | 63.0% |
| Amgen Inc. (AMGN) | 14.1% |
| Pfizer Inc. (PFE) | 0.4% |
| Viking Therapeutics Inc. (VKTX) | 255.4% |
| Structure Therapeutics Inc. (GPCR) | -1.2% |
| Roche Holding AG (OTC: RHHBY) | 14.4% |
*As of the market close on Aug. 20.
Novo Nordisk A/S (NVO)
Novo Nordisk is up 31.3% year to date as of Aug. 20, but the stock’s accelerated growth rate may be tested after Medicare slashed diabetes drug costs by up to 79% in mid-August to comply with the Inflation Reduction Act. Novo Nordisk was one of 10 companies with diabetes and weight loss drugs affected by the price cuts, which averaged 22%, according to an estimate from Leerink Partners.
The price cuts are scheduled to commence in 2026, with U.S. seniors saving a combined $1.5 billion in out-of-pocket costs.
On Aug. 19, the company also announced a $358 million (DKK 2.4 billion) buyback of B shares scheduled through November. The company announced that the entire share-buyback program should cover $3 billion (DKK 20 billion), which could benefit shareholders in the coming year.
Eli Lilly and Co. (LLY)
Eli Lilly shares are up 63% in 2024, buoyed by the company’s type 2 diabetes drug Mounjaro and its newcomer, Zepbound.
Analysts think highly of the stock. Barclays’ Carter Gould has maintained a “buy” rating on LLY with a target price of $1,025. The stock closed at $949.97 per share on Aug. 20.
Lilly has received a shot in the arm from its new drug Zepbound, which was approved for commercial sale in November 2023. Considered an effective weight reducer, Zepbound has racked up $1.2 billion in sales in the April-to-June period alone, giving Lilly an immediate and massive hit.
Lilly now has a stiff one-two punch, with Zepbound flying off prescription-drug shelves and diabetes drug Mounjaro expected to help boost revenue to between $40.4 billion and $41.6 billion in 2024, up from $34.1 billion in 2023.
Add a 0.6% forward dividend yield and the fact that Lilly has doubled its dividend payments since 2023, and it’s no wonder investors are giving LLY a closer look.
Amgen Inc. (AMGN)
AMGN shares closed at $328.55 on Aug. 20, with the stock up about 14% on a year-to-date basis. Among other performance attributes, AMGN offers a robust 2.7% dividend and has delivered a dividend increase for 12 consecutive years. In the past decade alone, Amgen’s dividend payout has risen nearly 270%, which no doubt agrees with the company’s cash-minded shareholders.
The company is well entrenched in the anti-inflammatory drug sector with its top-selling drug Enbrel ($909 million in Q2 2024 sales is a slowdown), and it’s making great strides in the small-cell lung cancer field, with Imdelltra, which became FDA-approved in the second quarter.
Investors are still waiting for Amgen’s new weight loss drug, MariTide (formerly AMG133), its injectable obesity drug. MariTide’s early stage testing showed an average of 14.5% weight loss after three months of use.
But the standout finding was that trial participants maintained a weight loss of 11.2% at 150 days after their last dose, while weight regain has been an issue with some competitor drugs. Mid-stage trials have been highly promising, but investors will have to be patient, as the Amgen weight loss drug isn’t expected to be sold commercially until 2028, according to a recent JPMorgan research note.
Pfizer Inc. (PFE)
New York-based Pfizer is another drug industry dividend giant, offering shareholders a whopping 5.8% forward dividend yield. The problem is the company’s year-to-date share performance, which has been a tepid 0.4% increase.
The company shared some bad news from the vaccine front this week, as a late-stage study on Pfizer’s mRNA-based vaccine to treat influenza and COVID-19 fell short of a key primary immunogenicity objective in a study of 8,000 patients ages 18 to 64.
Doubling down on the bad news, Pfizer’s journey into the weight loss drug market has fallen flat, as its twice-daily obesity-fighting pill danuglipron triggered nausea and other stomach issues in trials.
In July, the company changed tactics on its weight loss drug, cutting the daily dose from two to one. The company is currently engaged in clinical trials on danuglipron, with results expected to be released late in 2024.
Meanwhile, Pfizer has some promising drugs in its research and development pipeline that will buy it time while it recasts its weight loss drug program. Dependable Eliquis, the company’s blood-thinning drug, and heart drug Vyndaqel are still propping up sales. In contrast, Pfizer’s new B-cell lymphoma drug Adcetris tested remarkably well with patients, the company announced in March.
PFE investors may find its weight loss drug campaign tough to swallow, but the company has given them some positive results to chew on in the meantime.
Viking Therapeutics Inc. (VKTX)
While Viking shares are up 255.4% year to date, growth has slowed over the past three months, with the stock only gaining about 2% in that time period.
What’s the holdup? Not its weight loss drug. In July, the company announced it would pump the pedal on its once-per-month injectable drug, VK2735, and send it directly into final-phase testing in late 2024. The move, apparently cleared by the FDA after a recent meeting, means Viking will be bypassing any phase 2b studies, putting the new weight loss drug firmly on the fast track. In testing, Viking announced that patients averaged a 5.3% weight loss after one month of usage.
That news sent the stock prices of the major obesity-fighting drug developers falling. On the day of the announcement, Viking saw its shares soar by 28% while the stock prices of competitors fell, such as Lilly (down 4.5%) and Novo Nordisk (down 3%).
Viking’s injectable-drug news has given the company a nearly 30% share price boost over the past month, and the company is looking to build on that momentum in the second half of 2024.
Structure Therapeutics Inc. (GPCR)
San Francisco-based Structure’s shares have risen about 13% in the past three months, reversing a 2024 share price slide that’s led to a 1.2% loss year to date.
GPCR shares rose 8% in June after the company’s GLP-1 weight loss pill glowed in mid-stage clinical trials. Patients experienced a 6% decline in body weight after using the drug.
Like a lot of young drug companies, Structure is fighting time and cash flow until its weight loss drug is commercially released, which likely won’t happen until 2031, according to a recent research note from Guggenheim Securities analyst Seamus Fernandez. The company has $900 million in cash, but its cash burn rate could speed up with accelerated late-stage trials, an ongoing concern for shareholders.
Wall Street analysts are on board, with Cantor Fitzgerald’s Prakhar Agrawal holding a “buy” position on the stock with a target price of $65. GPCR shares are currently trading at about $40.
Roche Holding AG (OTC: RHHBY)
Roche continues rocking in 2024, with a year-to-date share-price rise of 14.4% and a three-month increase of 26.5%.
Earnings were moderately lower in the second quarter for the Swiss drug developer, with sales down from CHF 29.8 billion ($35 billion) in the first half of 2023 to CHF 29.4 billion ($34.5 billion) in the first six months of 2024.
Share growth can mostly be credited to recent upbeat clinical trials of the company’s obesity drug that came with Roche’s $2.7 billion purchase of drug maker Carmot Therapeutics.
Carmot is developing a trio of clinical-stage incretin-based and oral-based obesity and diabetes treatments, two of which showed promise in mid-stage testing.
Thanks to its savvy Carmot acquisition, Roche is saving millions of dollars in R&D weight loss drug development, and it’s getting results in trials from its pill-based weight loss drug CT-996, which triggered a mean weight loss rate of 7.3% versus 1.2% for study participants who took the placebo.
Like Pfizer and Amgen, Roche could give investors promising exposure to the weight loss drug market while offering a wide breadth of other established drug treatments that already add to the company’s bottom line. A 3.3% forward dividend yield adds to its appeal.
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7 Diabetes and Weight Loss Drug Stocks for 2024 originally appeared on usnews.com
Update 08/21/24: This story was previously published at an earlier date and has been updated with new information.
