Weight-loss medications are revolutionizing both healthcare and the stock market. Companies such as Eli Lilly & Co. (LLY) and Novo Nordisk A/S (NVO) have seen their stock prices surge as their treatments gain popularity. These drugs are addressing the needs of nearly 40% of U.S. adults who face obesity, creating significant growth potential. For investors, the challenge lies not just in spotting the trend, but in finding opportunities that haven’t already been inflated by market hype.
Key Takeaways
Over one billion people worldwide struggle with obesity, a condition increasingly treated with prescription medications.
Investors can gain exposure by purchasing shares in pharmaceutical companies or through specialized funds covering the sector.
Looking beyond the headline-grabbing stocks may uncover less obvious opportunities for growth.
Ways to Invest in Weight-Loss Drugs
Individual Stocks
The most direct method for participating in the weight-loss drug trend is buying stocks of companies manufacturing these medications.
Eli Lilly produces Mounjaro and Zepbound, both popular treatments in the U.S.
Novo Nordisk, based in Denmark, is the maker of Ozempic, Saxenda, and Wegovy.
Other FDA-approved players include:
Takeda Pharmaceutical (Japan)
Rhythm Pharmaceuticals Inc. (RYTM) – Boston-based
Vivus Inc. – California-based
Investors can also consider companies developing future obesity treatments, including:
Amgen Inc. (AMGN)
Viking Therapeutics Inc. (VKTX)
Structure Therapeutics Inc. (GPCR)
Additionally, large pharmaceutical companies such as Pfizer Inc. (PFE) and AstraZeneca plc (AZN) are attempting to enter this growing market, offering potential long-term value.
Fast Fact: Weight-loss drugs may also influence other sectors. For instance, a shift in eating habits could impact food manufacturers or retailers like Walmart Inc. (WMT).
Exchange-Traded Funds (ETFs)
For investors seeking diversification across multiple companies, weight-loss-focused ETFs are an attractive option. Some ETFs launched to capitalize on this trend include:
Amplify Weight Loss Drug & Treatment ETF (THNR)
Roundhill GLP-1 & Weight Loss ETF (OZEM)
Tema Obesity & Cardiometabolic ETF (HRTS)
These funds allow investors to gain exposure to the sector without betting on a single company.
Impact on Healthcare Stocks
Investing in high-growth trends can be tricky because early success often leads to overvaluation.
As of January 2025, Eli Lilly shares had surged approximately 476% over five years, trading at 88 times earnings.
Novo Nordisk stocks increased 178% in the same period, now trading at 28 times earnings.
To identify opportunities in an overhyped market, investors might explore:
Suppliers of essential ingredients or technology
Companies indirectly benefiting from increased drug adoption
Large, established pharmaceutical companies playing catch-up, which may be undervalued despite strong track records
History shows that once a market matures, well-financed incumbents often capture a significant portion of growth.
Conclusion
The surge in weight-loss drugs presents exciting investment opportunities, but growth potential is often already reflected in stock prices. Smart investors may benefit by identifying indirect beneficiaries or pharmaceutical giants poised to capitalize on market expansion.
Learn more about investing strategies on financeadmit.com.
Frequently Asked Questions (FAQ)
1. What are the best ways to invest in weight-loss drugs?
You can invest by buying stocks of companies producing these drugs, investing in ETFs covering the sector, or exploring firms developing future treatments.
2. Are Eli Lilly and Novo Nordisk the only companies in this sector?
No, other FDA-approved companies include Takeda Pharmaceutical, Rhythm Pharmaceuticals, and Vivus, while big pharma like Pfizer and AstraZeneca are also entering the market.
3. How do ETFs help investors in this sector?
ETFs allow you to invest in a basket of weight-loss drug companies, offering diversification and reducing risk compared to single-stock investments.
4. Why might investing directly in leading drug makers be risky?
Stocks like Eli Lilly and Novo Nordisk may already have high valuations due to hype, meaning future growth could be limited or priced in.
5. Can weight-loss drugs affect other industries?
Yes, changes in American eating habits could impact food producers and retailers like Walmart, potentially creating indirect investment opportunities.
6. What are indirect beneficiaries of weight-loss drugs?
Suppliers of key ingredients, technology partners, or companies helping distribution and logistics could see growth from increased drug adoption.
7. Should investors consider established pharma companies?
Yes, large pharmaceutical companies with strong track records may be undervalued and positioned to capitalize on the market as they catch up.