In 2021, shrinking celebrities and social media influencers sparked a frenzy of demand for injectable weight loss drugs. Three years later, the weight loss industry is thriving with no signs of slowing down.
Investors who aren’t already funding the mission to fight obesity still have time to benefit. Here, I explore the industry and six companies operating at the center of the mania. These are the pharma stocks that develop and make those in-demand weight loss drugs.
Understanding The Weight Loss Industry Today
A report from IQVIA Institute estimates 2022 consumer spending on weight loss was nearly $2.1 billion, up from $0.5 billion in 2018. The increase has largely been driven by the growing use of GLP-1 receptor agonists, a class of drugs that suppresses the appetite. Ozempic and Wegovy, made by Novo Nordisk (NVO), are in this class.
The IQVIA Institute also predicts that obesity spending could rise to $10 billion or more by 2027. This spending should be offset by lower health care costs for conditions related to obesity. That’s significant because it encourages health insurance providers to support these treatments.
According to a study published in the Journal of Managed Care & Specialty Pharmacy in 2021, obese adults incur double the medical costs of non-obese adults. As a footnote, the study was sponsored by Novo Nordisk. Separately, the CDC estimates that 41.9% of U.S. adults are obese and obesity-related medical expenses total $173 billion annually.
Criteria Used For Selecting These Weight Loss Stocks
Demand for GLP-1 drugs has been outpacing the supply. That imbalance plus the sheer size of the market have prompted other pharmas to develop similar therapies, some with potentially less severe side effects and more convenient dosing. The best stocks below represent the drugmakers with the most interesting weight loss treatments available for sale or in their pipelines.
Four of the six stocks are established drugmakers with larger product portfolios. These are the lowest-risk options of the group.
The remaining two stocks are clinical-stage pharmas that do not yet generate revenue. These can provide an opportunity to get in on the ground floor but there are significant investment risks. The biggest risk is that the treatments never reach the market.
In other words, there’s a spectrum of available investments here, from established pharma to speculative play. Investors should carefully research the options to decide which spot on the spectrum feels right.
Also, these companies do largely demonstrate growth characteristics. The industry is just too popular among investors right now to allow for true bargains. Investors interested in value plays should see our best value stocks and best small-cap value stocks for 2024.
The brain trust at Forbes has run the numbers, conducted the research, and done the analysis to come up with some of the best places for you to make money in 2024. Download Forbes’ most popular report, 12 Stocks To Buy Now.
Best Weight Loss Stocks To Buy Now
The table below includes six pharmaceutical stocks that have or are developing GLP-1 weight loss treatments. The companies are ordered from largest to smallest in terms of market capitalization.
1. Eli Lilly (LLY)
- Stock price: $883.88
- Trailing 12-month (TTM) EPS: $6.79
- EPS growth: 7.95%
- Dividend yield: 0.59%
Business Overview
Lilly makes drug treatments and sells them to customers around the world. The company’s main therapeutic areas are cancer, diabetes, obesity, immunology, Alzheimer’s disease and pain.
Why LLY Stock Is A Top Choice
Lilly is the largest and most-established company on this list. Founded in 1876, Lilly employs an R&D staff of nearly 10,000 people across seven countries. The company additionally has conducted clinical research in 55 countries and manufactures drugs in nine countries.
LLY’s FDA-approved weight loss drug is Zepbound, known generically as tirzepatide. Zepbound is an injectable drug that requires one dose weekly. Lilly also markets a tirzepatide treatment approved for type 2 diabetes under the brand name Mounjaro. The primary difference between Zepbound and Mounjaro is the indication on the label.
2. Novo Nordisk A/S (NVO)
- Stock price: $141.96
- TTM EPS: $2.90
- EPS growth: 52.93%
- Dividend yield: 0.97%
Business Overview
NVO, headquartered in Denmark, makes and distributes medications and devices globally. The company has two areas of focus: rare disease treatments and medications for diabetes and obesity.
Why NVO Stock Is A Top Choice
NVO makes Ozempic and Wegovy, the two most prominent weight-loss drugs in the U.S. Both treatments are once-weekly injectable forms of semaglutide. Wegovy is FDA-approved for obesity and weight loss, while Ozempic is approved for type 2 diabetes. Many physicians prescribe Ozempic for weight loss because it’s the same drug as Wegovy in a slightly lower dose.
3. AstraZeneca (AZN)
- Stock price: $78.88
- TTM EPS: $2.03
- EPS growth: 34.11%
- Dividend yield: 1.9%
Business Overview
AstraZeneca is a U.K.-based pharmaceutical company that develops treatments for cancer and rare diseases as well as cardiovascular, respiratory and autoimmune conditions.
Why AZN Stock Is A Top Choice
In 2023, AstraZeneca reached an agreement with China’s Eccogene to license a daily weight loss pill known as ECC5004. ECC5004 is a GLP-1 receptor agonist that is taken orally rather than injected.
The drug is not yet available for sale. ECC5004 is in a Phase 1 clinical trial in the U.S. Preliminary results have been positive in terms of weight loss efficacy and tolerability.
A daily oral weight loss treatment is more convenient than a weekly injection and likely to be a more popular choice. There is also some evidence that the medication is rapidly absorbed away from the stomach, which could limit the intestinal side effects. Injectable GLP-1 drugs can cause nausea, diarrhea and vomiting.
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4. Amgen (AMGN)
- Stock price: $308.16
- TTM EPS: $7
- EPS growth: 52.41%
- Dividend yield: 2.9%
Business Overview
Amgen is a global pharmaceutical company that focuses on the areas of oncology and hematology, plus kidney, bone, cardiovascular and inflammatory diseases.
Why AMGN Stock Is A Top Choice
Amgen is preparing for Phase 3 trials on an injectable weight loss treatment called maridebart cafraglutide or MariTide. In a recent earnings release, CEO Robert Bradway expressed confidence that MariTide was sufficiently differentiated from currently available injectable GLP-1 drugs.
Amgen’s Chief Scientific Officer Jay Bradner also said MariTide could be dosed monthly rather than weekly. The drug will still likely have the intestinal side effects common to GLP-1 drugs, but those symptoms may be more manageable with less frequent treatments.
Amgen’s success in the weight loss space will hinge on whether MariTide can establish a competitive advantage. In the meantime, Amgen shareholders can enjoy a 2.9% dividend while they wait for the company to earn a spot in the weight loss drug race.
5. Viking Therapeutics (VKTX)
- Stock price: $52.74
- TTM EPS: ($0.92)
- EPS growth: (2.13%)
- Dividend yield: NA
Business Overview
Viking Therapeutics develops treatments for metabolic and endocrine disorders. The company currently has three medications in clinical trials. None are available for sale.
Why VKTX Stock Is A Top Choice
Viking has two formulations of its GLP-1 obesity drug VK2735 in clinical trials. One is a once-weekly injectable like Wegovy. The other is an oral dose. The company reported positive results from Phase 2 trials of its injectable treatment and is discussing next steps for approval with the FDA.
The tablet form of the drug demonstrated promising efficacy and tolerability in its Phase 1 clinical trial. Phase 2 trials will begin later this year.
6. Structure Therapeutics (GPCR)
- Stock price: $45.57
- TTM EPS: ($2.25)
- EPS growth: NA
- Dividend yield: NA
Business Overview
Structure Therapeutics, like Viking, is in the pre-revenue phase. GPCR has three oral treatments moving through clinical stages. Two are weight loss drugs and one targets cardiopulmonary disease.
Why GPCR Stock Is A Top Choice
The two weight loss drugs in Structure’s pipeline are GSBR-1290 and ANPA-0073. GSBR-1290 has completed a Phase 2a obesity study and a study testing a tablet formulation. Both reported statistically significant weight loss results and “favorable” tolerability results.
Based on the tablet study results, the company plans to use the drug in tablet form for future trials, including a Phase 2b obesity study that should begin in the fourth quarter 2024.
ANPA-0073 has completed its Phase 1 dosing study and the company is evaluating it for Phase 2 trials.
Bottom Line
With the support of health insurance companies plus high demand from consumers, GLP-1 weight loss drugs are evolving from trend to industry mainstay. Lilly and Novo Nordisk have market share and profits today, but that could change. Pharma stocks that bring more convenient and tolerable formulations to the masses could also generate real value for shareholders.
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