On a diet
Dec 18, 2023
The 2 main pharma companies heavily involved in weight-loss drugs, namely Eli Lilly and Novo Nordisk, currently trade at 100% to 200% premiums in terms of price-to-earnings ratio to their peers. Growth in obesity drugs is spectacular as analysts predict obesity drug could reach 100 bn USD of yearly sales by 2030. Over the next 5 years, Novo’s EPS is estimated to grow by 28% a year, mainly driven by obesity. While we agree the break-through character of these drugs and do not want to spoil the party, we think both companies now look priced to perfection as investor focus will certainly shift to production capacity, pricing of the drugs, new entrants and generic threats.