For many struggling with obesity, new medications have been “a gift,” as Oprah Winfrey recently described it in declaring she was “done with the shaming.” Investors in drug manufacturers Novo Nordisk and Eli Lilly might use the same term for the returns they’ve realized over the past year. U.S.-listed shares of Novo Nordisk, the maker of Ozempic and Wegovy, have climbed nearly 52% year to date, while Lilly’s have gained 56% over the same period. Lilly’s Zepbound recently entered the weight loss market, and is off to a strong start. It has the same active ingredient, tirzepatide, as its Mounjaro type 2 diabetes treatment. But what’s ahead for the weight loss trade in 2024? “We’re very optimistic about that market, and we’re at the very, very early innings,” said Andy Acker, a portfolio manager on Janus Henderson’s health-care team. The firm has held positions in both stocks over the past decade, and expects that there’s room in the category for multiple companies to create “strong, profitable new franchises that can help a lot of patients around the world.” Lilly and Novo have the market to themselves at the moment. According to FactSet, the majority of Wall Street analysts maintain buy ratings on both stocks. The views are a bit more positive for Lilly, but some analysts have grown more cautious as valuations have gotten richer. Still, with an average price target of $646, Lilly shares could climb 13% from Friday’s close, the data provider said. Both companies have been investing heavily to build out manufacturing capacity, as the supply today is far short of the demand for the drugs. Investors will be eager to see how the companies manage that balance in 2024. Wall Street expects the market for these drugs will swell to more than $100 billion before the end of this decade. Beyond Ozempic In 2024, investors may want to look at several other companies, both large and small, vying to enter the category with their own versions of these drugs. The new drugs mimic…
2023-12-25 09:00:00
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