Weighing Two Drug Titans Against Each Other

Editor’s Note: Our experts here at INO.com cover a lot of investing topics and great stocks every week. To help you make sense of it all, every Wednesday we’re going to pick one of those stocks and use Magnifi Personal to compare it with its peers or competitors. Here we go…

According to recent reports, the World Health Organization (WHO) may for the first time include drugs that combat obesity on its “essential medicines list,” which is used to guide government purchasing decisions in low- and middle-income countries.

This will only add to the buzz around these drugs, which is approaching the levels surrounding artificial intelligence (AI) and chatbots like GPT-4.

Despite the hype, we believe investors are right to be excited about the drugs.

These drugs will find a quickly growing market from expanding waistlines. That’s because obesity is growing in tandem with rising global prosperity. A bad side effect of prosperity is that consumption of not-so-healthy foods rises a lot, as does the prevalence of occupations requiring less physical work.

Obesity already affects about 650 million people around the world. America’s waistline is among those rapidly expanding—almost half of Americans will be obese by 2030, a Harvard study found. It also estimated that about 18% of healthcare spending would then go to related conditions of obesity.

No wonder, then, that Morgan Stanley thinks the market for weight-management medicines could reach $54 billion in just seven years—with $31.5 billion of this from the U.S. alone.

Companies behind the new obesity drug treatments are flying high:

Novo Nordisk (NVO) — the dominant player in diabetes treatments — generated $2.4 billion in sales from obesity treatments last year. And it has barely started to widely distribute its new obesity drug, Wegovy. Its shares are up 43% over the past year, and 15% year-to-date.

Eli Lilly (LLY), whose diabetes drug, tirzepatide, should get regulatory approval to treat weight loss this year, has seen its stock price rise 17.5% over the last year, although it is down 7% year-to-date.

So, we thought we’d do a comparison of the companies. The easiest way to do that is to ask Magnifi Personal to do it for us. It’s as simple as asking this investing AI to “Compare NVO to LLY” and selecting a three-year timeframe. Continue reading "Weighing Two Drug Titans Against Each Other"