You’ve greater than seemingly heard of Ozempic, the diabetes drug made by Danish healthcare big Novo Nordisk and hailed as a miracle weight-loss remedy. GLP-1 weight-loss and diabetes medication corresponding to Ozempic have redefined what buyers have come to count on from healthcare firms lately.
At eToro, we ran an evaluation of the companies producing these remedies, and located one thing fascinating: their shares delivered the form of returns extra typically seen within the high-growth expertise sector than these of conventional pharma.
We constructed two baskets of main drugmakers: one centered on GLP-1 producers (Novo Nordisk, Eli Lilly, Sanofi, Teva and Hikma), and one other on non-GLP-1 friends (Novartis, Johnson & Johnson, GlaxoSmithKline, AbbVie and Bayer). Over 5 years, the GLP-1 basket surged 130%, in contrast with simply 42% for non-GLP-1 companies. That efficiency additionally outpaced the S&P 500 (+98%), the EuroStoxx 50 (+73%) and the FTSE 100 (+59%).
What makes this run extra outstanding is that it included a difficult previous yr. The GLP-1 basket was down 12% over the previous 12 months, with Novo Nordisk shares down 50%, whereas non-GLP-1 pharma was up 10%. By comparability, the S&P 500 rose 16% throughout the identical interval.
Over the previous 5 years, the stand-out performer was Eli Lilly, up 486%, adopted by Teva which has greater than doubled (+116%). Novo Nordisk climbed 76% regardless of a steep pullback within the final yr, whereas Hikma slipped 28%. On the non-GLP-1 facet, AbbVie was the strongest (+168% over 5 years), whereas Bayer was the weakest, falling virtually 40%.
The marketplace for weight-loss medication is projected to be price round US$130 billion by 2030, which might require an annual progress of practically 50% from immediately’s ranges. We now have seen shares of GLP-1 producers battle within the final 12 months on account of a reset on these lofty expectations. Valuations have grown, and companies like Novo Nordisk introduced that income wouldn’t develop as rapidly as anticipated, which led them to lower 9,000 jobs as they reduce operations.
Novo Nordisk has lengthy dominated this market with its insulin and GLP-1 merchandise, reworking the lives of sufferers globally with efficient long-term administration options. However rising demand for these merchandise has additionally seen an increase in competitors. Novo’s closest rival is Eli Lilly, a far bigger and extra diversified healthcare big. Eli Lilly has seen its shares surge within the final 5 years, with its diabetes drug Zepbound demonstrating sturdy outcomes for weight reduction.
Nonetheless, the anticipated extraordinary progress has made the sector probably the most enticing funding alternatives in healthcare, with pharmaceutical and biotech companies racing to develop the subsequent breakthrough remedy. Whereas it’s tough to foretell which firm will emerge because the dominant participant, one factor is evident: there may be huge potential on this house.
As life expectancy rises, so does the prevalence of diabetes – notably right here within the UAE, the place a couple of in 5 adults dwell with this situation. And the results prolong nicely past the inventory market. The rising recognition of GLP-1 remedies has influenced every little thing from native healthcare provide chains to eating tradition, with some Dubai eating places now providing smaller portion menus to cater to these utilizing appetite-suppressing medication.
For buyers, GLP-1 medication nonetheless symbolize probably the most thrilling tales in healthcare. Though the sector has confronted a little bit of a actuality examine these days following its distinctive run, the larger image is that world demand is rising quick, together with right here within the Center East. The businesses main this revolution are nonetheless shaping one of many greatest shifts we’ve seen in healthcare for years.
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