The Wall Street Journal reports that representatives of Novo Nordisk (NVO.US) and maker of Ozempic and Wegova, as well as its rival Eli Lilly (LLY.US), which makes anti-obesity drugs Zepbound and Mounjaro, are visiting US unions and HR teams in private companies, to make the case for implementing GLP-1 anti-obesity treatments, potentially improving sales and US market interest.
- According to consulting firm Leverage, about 25% or 65 million Americans have a health insurance plan that covers weight-loss drugs. Some 44% of U.S. employers with at least 500 employees offered health insurance extended to weight-loss drugs in 2024. So the market likes the 'proactive' activity from representatives of the two pharmaceutical giants.
- The drugs mimic the hormone that regulates appetite and blood sugar levels, and have become highly sought after for treating obesity and type 2 diabetes. Morgan Stanley estimates that the market for GLP-1 drugs will reach $105 billion by 2030, although this will depend on availability to patients. So far, US employers have been reluctant to cover the cost of obesity drug treatments.
- Currently, the Wegovy app costs $1,350 per month, and the Zepbound price is about $1,060 per month. Manufacturers emphasize that the fight against obesity and its related complications can lead to long-term savings in health care costs for employers.
- This year, the U.S. Food and Drug Administration approved Novo Nordisk's drug Wegovy to reduce the risk of heart disease. Eli Lilly is seeking approval for the drug Zepbound to treat sleep apnea. In addition, a number of studies suggest that the drugs can help with a number of conditions including addiction treatment and Alzheimer's disease. The recent market reaction was driven by broader
Eli Lilly and Novo Nordisk chart
Eli Lilly and Novo Nordisk shares are trading about 10% below the exponential average of the EMA200 (red line), which has historically been an accumulation opportunity for long-term investors. A sizable risk is the possible tightening of regulations on GLP-1 applications under the Donald Trump administration. The outlook for anti-obesity drugs has pushed the premium in the valuation of both companies to record levels.
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