Summary: Obesity has reached pandemic proportions, and leading pharmaceutical companies are fervently working to devise more potent solutions to address it. In this guide, we are looking at the top 3 obesity drug stocks to buy in 2024 through a regulated stock exchange platform such as eToro.
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What are obesity drug stocks?
Obesity drug stock
The whole pharmaceutical industry is highly competitive, so the companies involved in developing weight loss solutions are constantly trying to outdo one another. Consequently, investors have a broad range of investment opportunities before them, many of which have the potential for high profits.
Top 3 obesity drug stocks to buy in 2024
If you are interested in this sector of the pharmaceutical industry, we have compiled a list of the top 5 obesity drug stocks to buy in 2024:
- Novo Nordisk (NYSE: NVO);
- Eli Lilly (NYSE: LLY);
- Merck (NYSE: MRK).
Note
1. Novo Nordisk
Novo Nordisk (NYSE: NVO) is the leader among companies developing obesity and weight loss products thanks to its blockbuster drugs such as Ozempic, as well as Wegovy and Saxenda, two hormonal treatments that regulate appetite. Indeed, the company is relying on multiple contract manufacturers to meet the high industry and commercial demand for its products, all while trying to increase the accessibility of medications for the average consumer. Moreover, since Novo Nordisk has recently been expanding its operations to the U.K. market, the demand for its products is likely to increase even more.
Novo Nordisk stock price today
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2. Eli Lilly
Eli Lilly (NYSE: LLY) is another major player in the industry, having developed one of the most successful weight loss drugs, Mounjaro, which is primarily used in diabetes therapies. As another version of the drug is expected to gain approval for obesity later in 2023, Eli Lilly is well positioned to see further increases in stock prices and potentially reach $50 billion in annual sales from weight-loss drugs alone by the end of the decade.
Eli Lilly stock price today
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3. Merck
Merck (NYSE: MRK) is a long-standing pharma company counted among the top five companies in the industry by revenue. Although its performance is mostly dependent on the sales of its cancer treatment drugs, such as Keytruda, the company has been dipping its toes in the diabetes and weight loss waters.
For example, it offers weight management interventions to hospitals, health institutions, medical centers, and other institutions. Moreover, the company has made a lot of strategic moves, expanding its operations in Brazil and aiming to dominate the country’s obesity market with its new orally administered drugs. As more than 50% of Brazilian residents are considered obese, the move has the potential to put Merck in a profitable position in the following years.
Merck stock price today
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All stocks mentioned above are available for purchase at eToro, a platform featuring:
- Commission-free stock trading;
- 2,000+ stocks from 17 exchanges;
- Fractional shares;
- No account minimums.
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Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
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What to consider when investing in obesity drug stocks
When investing in obesity drug stocks, you must take into account some key characteristics of the company you are investing in and the broader industry. Those include:
- The company’s product portfolio and pipeline: First, evaluate the range of products the company has on offer to ensure it has diverse sources of revenue. In other words, make sure it has a portfolio that does not depend on a single drug or product;
- Clinical trials: Successful clinical trials can act as a significant catalyst for growth;
- Growth prospects: Drug development and testing are costly, so invest only in companies that can sustain such efforts. Examine their cash reserves, spending rates, and debt levels;
- Patents: Patents hold immense importance in pharma. Therefore, look for companies with exclusive patent rights to well-performing medications;
- Leadership: It is the company’s management board that is responsible for both profits and losses. Consequently, a seasoned management team with a long history of success in the industry is a positive indicator of potential profits;
- Market potential: Consider the potential market, i.e., consumer base size for the company’s products;
- Partnerships and acquisitions: Collaborations between multiple pharmaceutical companies are important as they drive innovation and thus lead to increased stock value.
Risks involved with obesity drug stocks
Investing in obesity drugs and other pharmaceutical stocks carries a multitude of risks. To minimize those risks and increase your chance of making a profit, consider primary factors, such as:
- Regulatory issues: New obesity treatments and products can come across regulatory challenges. For example, some countries may prohibit specific drugs, and some regulatory bodies like the Food and Drug Administration (FDA) can refuse to issue relevant licenses to every company;
- Operating costs: Clinical trials typically incur substantial costs due to extensive research and mandatory testing processes;
- Delayed profitability: Most pharmaceutical enterprises do not yield immediate results. On the contrary, it can take years for new drugs and products to be approved and reach the market — if they reach it at all;
- Competition: The pharma industry is highly competitive, and even a seemingly promising drug may amount to nothing in the end.
Pros and cons of investing in obesity drug stocks
Pros
- Some companies that focus on obesity products are at the very top of the pharma industry, so they have a lot of growth potential;
- There is a constant demand for obesity and weight loss products;
- The industry is vast, so investors have a lot of opportunities for diversification;
- It can give you a sense of satisfaction, knowing you are investing in companies focused on bettering lives.
Cons
- Regulatory issues can pose a potential problem;
- Clinical trials can always backfire, and companies can lose patent rights to specific drugs, with generic competition diminishing their profits;
- Some companies in the industry are known for low dividend yields;
- Investing in pharmaceutical companies can sometimes be profitable, but only after a long time, as drug testing and approval can take years and decades before the product reaches the market.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about the top 3 obesity drug stocks to buy in 2024
What are the top 3 obesity drug stocks to buy in 2024?
The top 3 obesity drug stocks to buy in 2024 include Novo Nordisk (NYSE: NVO), Eli Lilly (NYSE: LLY), and Merck (NYSE: MRK).
Where to buy obesity drug stocks?
To buy obesity drug stocks, investors can register an account at an online stock trading platform such as eToro.
Is investing in obesity drug stocks a good idea?
All investments are risky. However, with a solid trading strategy and realistic goals, investing in obesity drug stocks can be a solid venture into the pharmaceutical industry, especially if you invest in some of the better-performing companies.
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