In 2024, biopharmaceutical companies that developed weight loss drugs received a significant reward.
This is what made Novo Nordisk A/S CPH:NOVO-B (Europe’s biggest company in terms of market capitalization) and Eli Lilly & Co NYSE: LLY (the world’s leading healthcare firm) the first to reach a valuation of $1.0 trillion.
Analysts at UBS still expect that a less stable macroeconomic environment will make it more difficult for biopharma to perform well in 2025.
RFK brings uncertainty to weight loss drugs
UBS has a dovish outlook on biopharmaceuticals in the short-to-medium term, mainly because Donald Trump appointed Robert F. Kennedy Jr. as the head of the Department of Health and Human Services.
RFK, a well-known vaccine skeptic, “has publicly criticized proposals that would allow the government to cover GLP-1 drugs (weight loss) due to concerns about finances.”
The investment firm said in a report to clients on Tuesday that it is unclear how the appointment of his as head of HHS would affect the industry for weight loss drugs.
The anti-obesity drug market is expected to grow by more than $6.0 billion over the next four years.
UBS still forecasts growth in GLP-1
UBS expects GLP-1 to remain dominant in 2025, despite macroeconomic uncertainties.
Analysts recommend that you stick with the leaders in weight loss drugs, Eli Lilly, and Novo Nordisk to take advantage of the market’s potential, which is expected to be worth over $100 billion dollars by 2030.
The range of possible outcomes for Eli Lilly’s and Novo Nordisk’s franchises is broad. With successful pipeline readouts, there are possibilities to continue growth beyond 2031.
Lilly reported that Zepbound’s sales totaled more than $1 billion during the latest quarter. Mounjaro and the blockbuster treatment for weight loss contributed 42% of Lilly’s total revenue in Q3.
Wegovy brought in $2,5 billion in revenue for Novo Nordisk during the third quarter, which is an astounding 79% increase on an annual basis.
What is the highest possible stock price for Lilly and Novo?
UBS prefers to stick with Eli Lilly or Novo Nordisk for anti-obesity medications because an uncertain macroeconomic background could also weigh on the competition.
In a recent research note, its analysts stated that “while we recognize there is potential for competition to enter the market, we only see limited penetration due to Lilly and Novo’s entrenchment.”
In 2025, they also anticipate that sales of Zepbound will increase due to the improvement in supply. Both Novo Nordisk and Eli Lilly are also committed to developing an oral weight loss treatment.
UBS has set a price target of $1,100 on Eli Lilly that represents a 40% increase from the current price. The price target for Novo Nordisk is DKK 1,100 and suggests a 75% rise.
The post, Weight loss drug investments: Why 2025 can be a game changer may be updated as new information becomes available
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