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GLP-1 weight-loss drugs such as Wegovy have been making headlines. Given their health benefits, demand for these drugs is sky-high. Can Wegovy and other GLP-1 drugs be invested in? Absolutely. Here’s a look at some growth stocks that provide exposure to this exciting area of healthcare.
The leader in GLP-1 drugs
When looking for portfolio exposure to GLP-1 drugs, it’s hard to bypass Danish pharmaceutical company Novo Nordisk (NYSE: NVO).
It’s the maker of Wegovy. It also makes Ozempic. This is a diabetes drug that has the same active ingredient as Wegovy and also leads to weight loss. It’s worth noting that Ozempic has only been approved by the US Food and Drug Administration (FDA) for the treatment of diabetes.
Thanks to the success of its weight-loss drugs, Novo Nordisk’s revenues are surging. Revenue is expected to be 27% higher than last year for 2023 after the company raised its guidance on multiple occasions this year.
On the downside however, the stock is now quite expensive. At present, it trades at 44 times this year’s forecast earnings and 37 times next year’s.
Personally, I’d be a little hesitant about buying in that multiple as it doesn’t leave much room for error.
FDA approval coming?
The other major player in the GLP-1 space is US pharma giant Eli Lilly (NYSE: LLY).
It has a diabetes drug called Mounjaro that leads to weight loss. And the FA could approved this product for obesity treatment shortly. Like Wegovy, it has shown to help patients lose a large proportion of their body weight (up to 16%).
Additionally, Eli Lilly is working on a new product called ‘triple G’. This is designed to mimic the action of the GLP-1 hormone and has demonstrated even more powerful effects when it comes to weight loss.
Unfortunately, this stock is very expensive as well. Currently, its forward-looking P/E ratio is 88, falling to 47 using next year’s earnings forecast.
Again, I’d be a little hesitant about buying in at that multiple.
Other weight-loss stocks
Now, while Novo Nordisk and Eli Lilly are the two main companies in the GLP-1 space right now, there are plenty of other growth stocks that offer exposure to the theme.
Ultimately, the weight-loss drug boom could benefit a range of companies including healthcare consumables businesses (Catalent and Thermo Fisher Scientific are two helping Novo Nordisk make Wegovy) and virtual healthcare companies.
One stock I’ve had a nibble at to get some exposure to the theme is LifeMD. It’s a small US virtual healthcare provider that has just launched a new GLP-1-focused weight management programme.
Eligible participants can get access to GLP-1 medications like Wegovy and Ozempic through this programme if it’s deemed clinically appropriate.
LifeMD has said that its weight management programme could be a catalyst for significant growth and enhanced profitability. So I think there’s a lot to be excited about here.
That said, this is a high-risk, speculative stock as the company is tiny and not yet profitable. Given the risk level, I’ve only taken a really small position.
