Pharma giants Eli Lilly and Novo Nordisk drive retail investor interest amid weight-loss drug success

USA – Retail investor interest in Eli Lilly has soared to a more than two-year high following the approval of its weight-loss drug Zepbound.

Daily net purchases reached US$14.4 million on November 8, marking the highest levels since January 2021.

This surge aligns with a broader trend of retail investors being drawn back into the healthcare sector, particularly around obesity treatments, catalyzed by the successes of Eli Lilly and Novo Nordisk.

Both Eli Lilly and Novo Nordisk, viewed as leaders in the potential US$100 billion obesity treatment market, have witnessed heightened retail investor engagement.

This renewed interest follows institutional investors like JPMorgan Chase and BlackRock increasing their holdings in Eli Lilly during the third quarter.

Eli Lilly’s shares have climbed 61% year-to-date, outpacing the U.S. healthcare sector’s average, which is indicative of its growing prominence.

Novo Nordisk experienced record net retail purchases in October, propelled by promising results in a trial for its diabetes drug Ozempic’s effectiveness in treating kidney failure.

Novo’s American Depository Receipts (ADRs) have seen a 47% increase this year. The weight-loss drugmakers’ allure persists despite an overall decline in retail flows to U.S. exchanges as the holiday season approaches.

Eli Lilly’s strategic move to expand manufacturing operations into Germany adds another layer to its growth story.

The planned US$2.5 billion investment in a large plant in Alzey, Germany, signals the company’s commitment to meeting the rising demand for drugs in its diabetes and obesity portfolio.

The facility, set to employ up to 1,000 people, aims to enhance Lilly’s manufacturing network for injectables, supporting its production capabilities.

On the horizon, Pfizer seeks a share of the burgeoning weight loss drug market to recover from declining demand for its Covid products.

Pfizer’s experimental obesity pill, danuglipron, is under scrutiny as investors await phase two trial data by year-end.

The market potential for GLP-1s, a class of obesity and diabetes drugs, is estimated at US$90 billion, with Pfizer eyeing a US$10 billion segment share through an oral treatment.

The pharmaceutical industry’s shift towards oral drugs is significant due to their ease of manufacture and convenience for both doctors and patients. Oral pills offer a potential solution to supply constraints faced by injectable drugs.

For Pfizer, positive trial results could help the company rebound from setbacks, restoring investor confidence and mitigating the Covid-related challenges.

In the broader context, the pharmaceutical landscape is evolving beyond drug development to include strategic collaborations and manufacturing expansions.

Eli Lilly’s foray into Germany and Pfizer’s venture into weight loss drugs showcase the industry’s adaptability and pursuit of diversified growth opportunities.

As retail investors flock to pharmaceutical stocks, the sector continues to be a dynamic space driven by innovation, regulatory developments, and shifting market demands.

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