Which industries will benefit from a surge in demand for diet pills? Also, what industries need to be protected from lightning?

Zhitong Finance ·  09/18 18:59

Source: Zhitong Finance App

For investors, the impact of the surge in demand for diet pills is far more than$Novo-Nordisk A/S(NVO.US)$with$Eli Lilly and Co(LLY.US)$The rise in stock prices. Although Ozempic manufacturer Novo Nordisk has quickly become the company with the largest market capitalization in Europe, the question on the minds of many fund managers is which other stocks and industries will benefit from it. And just as importantly, who is likely to lose.

Among them, potential winners include syringe manufacturer Gerresheimer AG and drug distributors$McKesson(MCK.US)$Meanwhile, takeaways and beer makers may be in trouble due to changes in eating habits. At the same time, weight loss treatments may make the overall population healthier, thereby stimulating people's interest in$Peloton Interactive(PTON.US)$The demand for sports equipment and Novozymes A/S food ingredients.

Henk Grootveld, Head of Trend Investment at Lombard Odier Investment Management, said: “Weight loss treatments have changed the landscape in healthcare as people are turning to more preventive measures. “In addition to the healthcare sector, it could also have a huge impact on consumers and lifestyle trends, as these treatments reduce appetite.”

Here are some of the stocks and industries that are likely to be most affected:

pharmaceutical company

Thanks to the success of Wegovy and Ozempic injections (a class of drugs known as GLP-1), Novo Nordisk became Europe's most valuable company this month. Additionally, Eli Lilly's stock price has risen 57% this year, and the US is expected to approve the use of its Mounjaro diabetes medication to treat obesity. Berenberg estimates that the global obesity market will be worth $85 billion by 2030, and products from Novo Nordisk and Lilly will drive growth over this decade.

Analysts think the future will be more optimistic. J.P. Morgan raised the Danish drugmaker's stock price target this month and raised expectations for Eli Lilly's higher sales potential for obesity products.

Meanwhile, other companies are also developing potential treatments, such as Zealand Pharma A/S and holding company Boehringer Ingelheim GmbH. Their experimental drugs are entering advanced research stages. Lucy Codrington, an analyst at Jefferies International Limited, said that Zealand Pharma's stock price has risen 48% this year, is a “key participant” in the “next wave of obesity treatments,” and has the potential to be acquired.

In contrast, some drug makers are more backward.$Pfizer(PFE.US)$Development of an experimental drug was stopped this year, but the company continues to test another drug that outperformed placebo in one study.$Viking Therapeutics(VKTX.US)$Mid-term trials have already begun, but$Gilead Sciences(GILD.US)$Novo Nordisk is being studied to treat nonalcoholic steatohepatitis, a liver disease associated with obesity. International Biotechnology Trust Plc Co-Manager Ailsa Craig is watching closely$Amgen(AMGN.US)$In the case of the latter, which is developing a treatment that is injected less frequently than Lilly, a mid-term study is expected to produce results next year.


While Novo Nordisk strives to meet demand, it is producing more pharmaceuticals than ever before, and this includes$Catalent(CTLT.US)$Good news for suppliers, including the company, which supplies fillers for their product Wegovy. According to reports, the drugmaker has also introduced$Thermo Fisher Scientific(TMO.US)$to help meet needs. Novo Nordisk CEO Lars Fruergaard Jorgensen said this month that the company has a policy of not talking about the names of partner companies.

Meanwhile, syringe manufacturer Gerresheimer said it plans to expand production capacity for syringe systems, autoinjectors, and pens to take advantage of the opportunities presented by GLP-1. According to the average target price compiled by Bloomberg, the German company's stock price has risen 65% this year, and analysts expect its share price to rise by nearly 30%.

Dan Lyons, fund manager of Janus Henderson Investors, said that drug distributors such as Maxson will also benefit. Last month, as massive sales of diet pills boosted sales, Maxon and$Cencora(COR.US)$ Inc. both raised their full-year performance expectations.

Medical device manufacturers

People's excitement about obesity treatment has taken its toll$ResMed(RMD.US)$with$Inspire Medical Systems(INSP.US)$Stock prices of equipment manufacturers that treat sleep apnea, etc. In August of last year, a study showed Novo Nordisk's Wegovy reduced the risk of heart attacks and strokes, prompting investors to know what other health conditions might reduce demand for this treatment. Since then, the two companies' stock prices have been on a downward trend.

In addition, it produces knee and hip implants for patients with osteoarthritis$Zimmer Biomet Holdings(ZBH.US)$Shares have also fallen 12% since the beginning of August. Obesity is known to be a contributing factor to osteoarthritis, so less obesity may mean fewer people need implants. However, the company's CEO Ivan Tornos said this month that if the body mass index improves, many patients who are too obese to undergo implant surgery will be able to undergo surgery.

Another area that has been hit is insulin companies$Insulet(PODD.US)$with$Tandem Diabetes Care(TNDM.US)$Manufacturers of diabetes equipment and others think that patients taking diet pills will have less need for insulin pumps. But according to Grootveld of Lombard Odier,$DexCom(DXCM.US)$with$Abbott Laboratories(ABT.US)$The production of continuous blood sugar monitoring devices may benefit, as prescriptions for diet pills are often accompanied by lifestyle changes, and these devices help measure these changes. He said that although Deccan Healthcare is a “victim,” the medical technology company should probably “stand in the camp of survivors.”

Deccan Medical recently told investors that after starting GLP-1 treatment, there were more insulin patients using continuous blood sugar monitoring devices than before. In a comment to Bloomberg News, an Abbott spokesperson said it is “very likely” that diet pills will further expand the use of such devices.

It is reported that WeightWatchers has been integrating with Abbott's FreeStyle Libre system to better monitor the blood sugar levels of diabetics. Shares soared after WeightWatchers bought remote health weight loss drug supplier SEQUENCE earlier this year.

Shares of companies linked to bariatric surgeries fell

Meanwhile, since July, stocks of companies related to bariatric surgery have been on a downward trend. Bariatric surgery is a type of surgery that helps people lose weight when diet and exercise don't work. At the time, surgical manufacturers$Intuitive Surgical(ISRG.US)$It said that patients' interest in diet pills affected the need for surgery.

Producing Titan gastric stapler$Teleflex(TFX.US)$It was stated that treatment with GLP-1 has led to a decline in demand.$Medtronic(MDT.US)$It was also pointed out that these treatments had a “slight impact” on bariatric surgery, which only accounts for a small portion of its business. Equipment suppliers$ConMed(CNMD.US)$The company estimates that about 2% of its devices are used in bariatric surgery.

Non-prescription drugs, cosmetics and other products may be boosted

Novo Nordisk's diabetes and weight loss medications all have the same active ingredient, called semaglutide. They work by suppressing appetite and slowing the movement of food through the digestive tract. Common side effects include nausea, vomiting, and uncontrollable diarrhea. As a result, Barclays analysts believe sales of over-the-counter drugs and supplements are likely to increase as patients look to mitigate side effects. Among them,$Haleon(HLN.US)$About one-fifth of sales comes from digestive health and other medicines, while$RECKITT BENCKISER GROUP PLC(RBGPF.US)$Probiotic products provide digestive support.

According to Barclays Bank analysts,$Haleon(HLN.WI.US)$Peers in the European consumer health sector are most likely to benefit, while French cosmetics company L'Oréal may benefit from consumers' attempts to conceal their so-called “Ozempic face,” that is, sunken faces and sagging skin due to rapid weight loss.

Lifestyle changes may become more common once patients start taking the drug to help with weight loss. “Fitness trackers, fitness apparel, and fitness centers may be more appealing to patients,” said Gregoire Biollaz, senior investment manager at Pictet Asset Management.

Food and drink

Diet pills have also had an impact on how people eat. A study conducted by Morgan Stanley (Morgan Stanley) found that patients taking diet pills tend to eat and snack less often, as well as reduce their intake of alcohol and carbonated drinks. At the same time, most of the 300 survey participants went to fast food and pizza places less often after they started taking the drug.

Pictet Asset Management said there is a growing industry looking for alternative ingredients to reduce the need for sugar and help keep insulin levels more stable. The company placed special emphasis on Danish ingredient manufacturer Novozymes, which has developed an enzyme that can make dairy products naturally sweeter.

Since obesity is linked to the development of other diseases, including diabetes, sleep apnea, and heart failure, the effects of diet pills may only increase if future studies show that diet pills reduce the risk of these diseases.

John Bowler, fund manager at Schroder Group, said: “The real value lies in the medical benefits this treatment will bring. The next 12-36 months will be a critical period for measuring health benefits.”


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