Weight-loss drugs are transforming both health care and Wall Street, with leading manufacturers like Eli Lilly & Co. (LLY) and Novo Nordisk A/S (NVO) seeing stock prices soar. These medications are reshaping a health care market that serves the 40% of U.S. adults with obesity. But for investors, the challenge isn’t just identifying the trend, it’s finding companies that aren’t already overvalued by the hype.
Key Takeaways
- More than 1 billion people around the world have obesity, which can be treated with these prescription medications.
- You can invest in weight-loss drugs by buying shares of the companies involved in their production or investing in funds that hold assets across the entire sector.
- To find value in a hyped sector, investors could also consider the less obvious beneficiaries that have flown under the radar.
How To Invest in Weight Loss Drugs
The most obvious way to invest in this sweeping trend is to buy shares of the companies involved in the production of these drugs or invest in funds that offer exposure to the entire sector.
Stocks
The names at the forefront of weight loss drugs are Eli Lilly, the U.S. manufacturer of Mounjaro and Zepbound; and Novo Nordisk, the Danish maker of Ozempic, Saxenda, and Wegovy. However, they aren’t the only companies in this space. Other U.S. Food And Drug Administration-approved weight loss drugmakers include Japan’s Takeda Pharmaceutical, Boston-based Rhythm Pharmaceuticals Inc. (RYTM), and California-based Vivus.
Another option is to invest in the developers of promising, yet-to-be-released obesity drugs, such as Amgen Inc. (AMGN), Viking Therapeutics Inc. (VKTX), and Structure Therapeutics Inc. (GPCR), or the established pharmaceutical giants playing catch-up, such as Pfizer Inc. (PFE) and AstraZeneca plc (AZN).
Weight-loss drugs aren’t just pointing the way to possible stock gains. Many investors are concerned that a significant shift in American eating habits could affect stocks for food companies and firms like Walmart Inc. (WMT) that sell their products.
Exchange-Traded Funds (ETFs)
If you’d prefer to invest in the industry overall and diversify among these companies, a weight-loss ETF is worth considering.
A few have been launched recently to capitalize on the weight-loss drug trend, including the Amplify Weight Loss Drug & Treatment ETF (THNR), the Roundhill GLP-1 & Weight Loss ETF (OZEM), and the Tema Obesity & Cardiometabolic ETF (HRTS).
How Have Weight Loss Drugs Affected Health Care Stocks?
The problem with investing in the next big thing is that its potential doesn’t stay secret for long, and investors tend to get overexcited.
At the end of January 2025, Eli Lilly’s shares had risen about 476% over five years, trading at 88 times the company’s earnings from the last 12 months. Novo Nordisk has also been popular: Its shares have risen 178% over the same period and now trade at 28 times earnings.
Investors often need to look further afield to find value in a hyped sector. That might mean investigating the suppliers of key materials or identifying the unlikely beneficiaries of more people taking weight-loss drugs.
Alternatively, it might pay to park your money in the established drug companies playing catch-up. Sometimes, they can be overlooked despite having the track record and finances to adapt and overpower competitors. If this industry lives up to its promise, history suggests the pharmaceutical giants will likely benefit.
The Bottom Line
Exciting prospects don’t necessarily make a company a good investment. Weight-loss drugs are trending, meaning growth potential may already be accounted for in these company’s share prices.
In cases like these, overoptimism is common as well. One strategy might be to seek returns from companies indirectly affected by the rise in these medications.
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