The GLP-1 drug marketplace for weight problems therapy is anticipated to skyrocket to $1 trillion or extra, in keeping with Maurits Pot, founder and CEO of Tema ETFs, who shared this optimistic forecast in an unique interview with Benzinga.
“Our view is that in the long run, this isn’t a two-horse race between Eli Lilly Firm LLY and Novo Nordisk A/S NVO,” Maurits acknowledged, difficult the prevailing notion of a duopoly within the weight-loss market.
Pot predicts that rising demand for weight reduction therapies and expanded purposes for GLP-1 medication will drive this trillion-dollar market alternative.
In November 2023, Tema ETFs launched the Tema GLP-1, Weight problems and Cardiometabolic ETF HRTS, the primary ETF centered on weight reduction. Since inception, the fund has risen 25%, barely outpacing the efficiency of the S&P 500, as tracked by the SPDR S&P 500 ETF Belief SPY.
The ETF’s main holdings embody Eli Lilly and Firm, Amgen Inc. AMGN, Novo Nordisk A/S, and Alnylam Prescription drugs, Inc. ALNY, every with about 5-6% weight. The HRTS portfolio additionally includes over 40 different weight-loss associated corporations.
Chart: Tema GLP-1, Weight problems And Cardiometabolic ETF Outperforms S&P 500 Since Inception
Chart: Benzinga Professional
Weight-Loss Therapies: Broadening Functions And Improvements
In keeping with Pot, GLP-1 medication could quickly discover purposes past weight reduction, first in diabetes, and coronary heart, liver and kidney illnesses, then probably treating circumstances similar to most cancers, Alzheimer’s, Parkinson’s and different neurogenic illnesses.
The traditional injection methodology faces challenges from new approaches specializing in oral administration or diminished dosage frequencies. Improvements intention to make therapies much less invasive, similar to shifting from weekly injections to probably as soon as each two months, or a lot simpler to fabricate, similar to producing oral tablets.
Weight problems results in varied illnesses like diabetes, coronary heart illness and most cancers. Addressing weight problems might thus mitigate a number of well being points, amplifying the market potential for GLP-1 medication.
This market is anticipated to increase past Eli Lilly and Novo Nordisk, addressing a number of illnesses areas.
“We might see a world the place half the world’s inhabitants takes GLP-1 or different weight reduction medication, however for completely different causes together with for major prevention” Pot famous, citing makes use of for weight problems, diabetes and probably even Alzheimer’s or most cancers.
Projections Behind The $1 Trillion Estimate
The worldwide variety of overweight people is anticipated to double from 1 billion to 2 billion by 2035. Even with out this progress, the prevailing 1 billion overweight folks signify a considerable market.
If long-term therapy reaches solely 20% of right this moment’s overweight inhabitants, much like the present penetration charge for diabetes medication, that equates to 200 million people. Assuming a value discount from $12,000 to $6,000 per particular person yearly, the marketplace for GLP-1 medication might surpass $1 trillion, Pot defined.
Goldman Sachs estimates the market at $100-130 billion, however Pot believes it might attain $1 trillion even earlier than contemplating speculative purposes for most cancers, Alzheimer’s and Parkinson’s. The market’s dimension is constantly underestimated, with estimates rising each few months.
Patent expirations will even form the market. Within the U.S., patents for Ozempic/Wegovy run out in 2032, in Europe in 2031, and in China in 2026.
“We predict it is a trillion-dollar market earlier than the patents run out,” Pot acknowledged.
Focus On Small-, Mid-Caps
When requested why traders ought to deal with a diversified basket of weight-loss-related shares as a substitute of some heavyweights, Pot defined “the affect of constructive scientific outcomes on this huge marketplace for small and med-cap biotechs is way increased” not like bigger companies similar to Eli Lilly.
He underscored the significance of getting mega caps as portfolio stability however notes that smaller corporations could provide increased returns in the long run.
Pot highlighted that the biotech sector is ripe with mergers and acquisitions. Final yr alone, there have been 22 biotech M&A offers exceeding $1 billion U.S in worth.
Main well being care corporations with out an weight problems enterprise, like Merck & Firm Inc. MRK, Pfizer Inc. PFE, and Abbvie Inc. ABBV, are more likely to search acquisitions.
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