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Novo, Eli Lilly… The big stock market winners from the global increase in obesity

Date: July 14, 2024 Time: 13:29:09

Obesity rates have doubled since 1990 and are increasing almost twice as much among children. This is quite sad, but a reality. As life expectancy increases, adults over 50 are working and living longer than before. Together, longevity and excessive weight could place a huge financial burden on health systems and force an urgent change in the way health budgets are allocated, moving to an “early detection and prevention model.”

And this would generate investment opportunities for those best positioned companies. The World Health Organization, for context, estimates that obesity affects global GDP by 2.4%. This figure is expected to increase to 2.9% in 2035 (about 4% in the United States), as the proportion of adults who are overweight or obese would rise from 42% to 54%. A real problem.

In addition, this pathology is associated with more than 200 health complications, contributes to more than half of the prevalence of diabetes, and a quarter of the occurrence of coronary heart disease and stroke. In other words, obesity is a recognizable surrogate marker of chronic disease, and awareness and social education will encourage patients to seek help.

The narrative around this issue has clearly changed. There is increasing awareness and many companies have positioned themselves quite well in order to combat associated diseases. That is why, with this problem, Morgan Stanley has prepared a report in which it highlights the companies that, by attacking these complications, could have growth potential in the coming years.

“Our basic hypothesis is that the global obesity market will cover $105 billion by 2030,” says the North American banking entity. “Extrapolating the strong initial dynamics in the United States and the demand in Europe, we now predict that the global obesity market will be 28 billion dollars larger than what we estimated years ago,” he warns, but not before emphasizing that 20 million American patients will receive highly effective anti-obesity drugs in 2030.

“Taking into account that we assume that patients continue treatment for an average of 8 months, this represents a cumulative total of 33 million US patients treated between 2021 and 2030, so we predict a distribution of sales in 2030 of 78. 000 million dollars in the United States and 27,000 million outside that country,” he predicts.

The great highlights

The adoption of anti-obesity drugs in the North American country in the last 12 months has been hampered by shortages in the supply chain, with just over 600,000 patients receiving highly effective drugs such as Wegovy and Zepbound in 2023.

The rapid expansion of reimbursements to cover 50 million Americans (out of an adult obesity prevalence of about 110 million) would have supported strong patient demand, which has continued to outpace drug supply driven by network activity. social.

Outside the United States, NovoNordisk has introduced Wegovy in eight markets on a direct payment basis, with limited volume launches in the most populated regions and without supply limitations in Denmark, Norway and Iceland, where initial acceptance has been very strong.

The unprecedented underlying demand for obesity drugs has driven enormous investment in the supply chain. Hence, their commitment to two large companies to capitalize on this growing obesity trend on a global level: “We predict that NovoNordisk and Eli Lilly together will spend more than $50 billion in CAPEX between 2022 and 2028 to support the supply chain behind of its GLP-1-based obesity franchises.”

Catalent, which provides filling and finishing services for LPG-1 automatic injectors to Novo Nordisk, has forecast that revenue from this product will increase sixfold between 2023 and 2026, and will double again between 2026 and 2030. Meanwhile, Morgan Stanley estimates Eli Lilly will more than quadruple its global LPG-1 autoinjector capacity in 2022-27, while repurposing its insulin pen capacity and adding alternative sources of fill-finish capacity.

“We expect Novo and Lilly’s huge supply chain investments to create barriers to entry, establishing economic moats that protect both companies’ expanding obesity franchises from new competitors,” he describes.

The North American banking entity expects Novo Nordisk and Eli Lilly to maintain a combined 84% market share in the obesity-related business in 2035. “This reflects the strength and depth of their production lines, as well as the economic moats that are creating in terms of active pharmaceutical ingredients (API), fill-finish, clinical development and reimbursement,” he highlights. “Obviously, this will be largely favorable to its price in the markets,” he adds.

Its updated forecasts suggest an increase of about 6% in revenue for Novo by 2030, while in the case of Eli Lilly it would be around 22%. The bigger rise for the Danish firm would reflect Morgan Stanley’s focus that the company would be making efforts to improve its division. However, he concludes by saying that both businesses have the ability to continue generating returns that greatly benefit investors.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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