We recently compiled a list of the 10 Best GLP-1 and Weight Loss Stocks to Buy Now. In this article, we are going to take a look at where Amgen Inc. (NASDAQ:AMGN) stands against the other GLP-1 and weight loss stocks.
According to WHO, more than one billion people worldwide are obese, including 650 million adults, 340 million adolescents, and 39 million children. A brand-new class of weight-loss drugs that don’t require diets or intense exercise appears to be revolutionary. With the help of these revolutionary drugs, overweight and obese individuals can reduce their body weight by 15% to 20%. “This could be the biggest opportunity that we’ve ever seen in the pharma industry,” says Andy Acker, portfolio manager at Janus Henderson Investors. Without question, weight-loss drugs are popular. Investors are comparing the US weight-loss medicine pioneer, to the leader in artificial intelligence chips.
Morgan Stanley Research, in light of this surge in demand, now projects that the global obesity drugs market will reach $105 billion in 2030, up from a previous estimate of $77 billion. In 2023, branded obesity drugs generated $6 billion in sales.
In 2023, the obesity drug market leader Semaglutide (the generic name for Ozempic, Wegovy, and Rybelsus) was the most prescribed Glucagon-Like Peptide-1 GLP-1 agonist , accounting for more than 88% of all new prescriptions, as per Forbes. The only GLP-1 drugs for weight control that have FDA approval to date are tirzepatide, liraglutide, and semaglutide.
J.P. Morgan Research estimates that the GLP-1 market will reach $100 billion by 2030, fueled equally by diabetes and obesity. By 2030, there may be 30 million GLP-1 users in the United States, or around 9% of the total population. The growing demand for obesity medications will have a wide-ranging impact, benefiting sectors such as biotech while generating headwinds for others, including food and beverage.
Chris Schott, a Senior Analyst covering the U.S. Diversified Biopharma sector stated:
“GLP-1s have been used to treat T2D since 2005, starting with the approval of Byetta, with follow-on products continually improving on efficacy. The most recent, Ozempic and Mounjaro, offer significant advantages over previous products and have accelerated class growth,” “Indeed, the newest generations of GLP-1s and combos lead to 15-25+% weight loss on average, well above prior generations of products.”
Regarding the treatment of obesity, some are hailing the newest generation of GLP-1 medications as “miracle drugs.” However, not everyone with obesity can use GLP-1s due to their high cost and restricted insurance coverage. According to Jonathan Gruber, Professor of Economics and Chairman of the Economics Department at MIT, if 40% of Americans with obesity took these treatments at present pricing (about $15,000 per person), the annual cost would exceed $1 trillion. This nearly equals the amount of money the government spends on the whole Medicare program. That’s an astounding number, then.
Over the past ten years, the usage of GLP-1 drugs, such as semaglutide, for weight loss has doubled, but among those with type 2 diabetes, its use has decreased by almost 10%, according to research published on Monday in the Annals of Internal Medicine. The prolonged medication scarcity that followed, the researchers caution, may restrict the medications’ accessibility to those with diabetes. Dr. Yee Hui Yeo, a clinical fellow in the Karsh Division of Gastroenterology and Hepatology at Cedars-Sina, highlighted that as demand for obesity medications rises, it is critical to guarantee that diabetic patients have access to GLP-1 medicines.
The FDA claims that the shortages are the result of rising demand. Not only do the shortages impact the United States: The European Medicines Agency cautioned that the GLP-1 drug shortage is a “major public health concern” that is unlikely to be remedied in 2024. People with diabetes have struggled to obtain their prescriptions due to shortages, with some limiting their drugs to manage, according to NPR.
The experts on the panel “Weighing the Future of Obesity Drugs,” including Debra Netschert of Jennison Investments, Julia Angeles of Baillie Gifford, and Gentry Lee of Fayez Serofim, discussed the potential of GLP-1 drugs, which were initially developed for treating diabetes but are now being used to treat obesity. Netschert emphasized the progression of GLP-1 medication delivery, ranging from weekly dosages to several daily injections, as well as continuous attempts to reduce injection frequency further and minimize adverse reactions. Netschert pointed out that 1.5 million out of the 110 million eligible patients in the United States are currently undergoing treatment with GLP-1 drugs, despite their outstanding performance, because of production limitations. Netschert and Angeles argued over who pays the expense, with Angeles claiming that the majority of patients pay out of pocket while Netschert cited considerable reimbursement from Medicare/Medicaid and insurance. Netschert stated that outside the borders of the United States, these drugs may be needed by as many as 700 million individuals worldwide. Notably, the panel discovered that U.K. payors, who are typically strict, authorized GLP-1 drugs faster than any other country, highlighting their perceived value.
The obesity drugs market is a high-growth industry and since it’s in its early innings, now may be a time to add some weight loss stocks to your watchlists.
Our Methodology
We sifted through holdings of weight loss ETFs and online rankings to form an initial list of 20 weight loss and GLP-1 stocks. Then we selected the 10 stocks that were the most popular among institutional investors. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them.
We used the companies’ year-over-year revenue growth as a tie-breaker in case two or more stocks had the same number of hedge fund holders. Also, we only considered stocks that received “Buy” or “Strong Buy” recommendations from analysts.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A pharmacist filling a prescription for a complex drug developed by the company.
Amgen Inc. (NASDAQ:AMGN)
Number of Hedge Fund Investors: 63
Revenue Growth Rate (year-over-year): 7.09%
A leading provider of biologic medicines, Amgen Inc. (NASDAQ:AMGN) has lately become a major force in the GLP-1 weight loss drug market. Over the past 12 months, the company’s stock has increased by more than 47%. This remarkable achievement follows a robust earnings report from AMGN in early May, when the company reported non-GAAP EPS of $3.96, beyond Wall Street estimates, and generated sales of $7.45 billion, up 22% over the same period the previous year.
Amgen’s first-quarter earnings showed strong growth, fueled by important medications including Epogen, Aranesp, and Repatha. The business increased its projection for FY 2024 operating EPS to between $19 and $20.20 and expects sales between $32.5 billion to $33.8 billion. These numbers point to a promising future for Amgen.
Amgen is making progress in the GLP-1 market with its obesity portfolio, which includes the intriguing AMG 133 and MariTide. These drugs have the potential to rival well-known brands like Wegovy and Ozempic. However, concerns include slower sales of legacy pharmaceuticals such as Enbrel, as well as possible threats from new product releases and clinical studies.
Carillon Eagle Growth & Income Fund stated the following regarding Amgen Inc. (NASDAQ:AMGN) in its first quarter 2024 investor letter:
“Amgen Inc. (NASDAQ:AMGN) shares suffered after the company released detailed clinical data on the lead obesity drug in its pipeline. Although investors recognized the medication’s efficacy, there were some concerns regarding other aspects of the medication revealed by the data.”
Despite concerns, analysts hold a consensus Buy rating on AMGN. In the first quarter of 2024, there were 63 hedge funds for Amgen Inc. (NASDAQ:AMGN) in IM’s database. The company’s biggest shareholder is John Zaro’s Bourgeon Capital with 54,254 shares worth $16.95 million.
In conclusion, it is pertinent to note that the strong earnings growth and a compelling GLP-1 market launch make Amgen a compelling investing opportunity. Given the growth prospects, investors wishing to increase exposure to a leading biotech company with significant future potential can consider AMGN.
Overall AMGN ranks 4th on our list of the best GLP-1 and weight loss stocks to buy. You can visit 10 Best GLP-1 and Weight Loss Stocks to Buy Now to see the other GLP-1 and weight loss stocks that are on hedge funds’ radar. While we acknowledge the potential of AMGN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMGN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None. This article is originally published at Insider Monkey.