You’ve more than likely heard of Ozempic, the diabetes drug made by Danish healthcare giant Novo Nordisk and hailed as a miracle weight-loss treatment. GLP-1 weight-loss and diabetes drugs such as Ozempic have redefined what investors have come to expect from healthcare companies in recent years.
At eToro, we ran an analysis of the firms producing these treatments, and found something interesting: their stocks delivered the kind of returns more often seen in the high-growth technology sector than those of traditional pharma.
We built two baskets of leading drugmakers: one focused on GLP-1 producers (Novo Nordisk, Eli Lilly, Sanofi, Teva and Hikma), and another on non-GLP-1 peers (Novartis, Johnson & Johnson, GlaxoSmithKline, AbbVie and Bayer). Over five years, the GLP-1 basket surged 130%, compared with just 42% for non-GLP-1 firms. That performance also outpaced the S&P 500 (+98%), the EuroStoxx 50 (+73%) and the FTSE 100 (+59%).
What makes this run more remarkable is that it included a challenging past year. The GLP-1 basket was down 12% over the past 12 months, with Novo Nordisk shares down 50%, while non-GLP-1 pharma was up 10%. By comparison, the S&P 500 rose 16% during the same period.
Over the past five years, the stand-out performer was Eli Lilly, up 486%, followed by Teva which has more than doubled (+116%). Novo Nordisk climbed 76% despite a steep pullback in the last year, while Hikma slipped 28%. On the non-GLP-1 side, AbbVie was the strongest (+168% over five years), while Bayer was the weakest, falling almost 40%.
The market for weight-loss drugs is projected to be worth around US$130 billion by 2030, which would require an annual growth of nearly 50% from today’s levels. We have seen shares of GLP-1 manufacturers struggle in the last 12 months due to a reset on these lofty expectations. Valuations have grown, and firms like Novo Nordisk announced that profits would not grow as quickly as expected, which led them to cut 9,000 jobs as they scale back operations.
Novo Nordisk has long dominated this market with its insulin and GLP-1 products, transforming the lives of patients globally with effective long-term management solutions. But growing demand for these products has also seen a rise in competition. Novo’s closest rival is Eli Lilly, a far larger and more diversified healthcare giant. Eli Lilly has seen its shares surge in the last five years, with its diabetes drug Zepbound demonstrating strong results for weight loss.
Still, the anticipated extraordinary growth has made the sector one of the most attractive investment opportunities in healthcare, with pharmaceutical and biotech firms racing to develop the next breakthrough treatment. While it’s difficult to predict which company will emerge as the dominant player, one thing is clear: there is enormous potential in this space.
As life expectancy rises, so does the prevalence of diabetes – particularly here in the UAE, where more than one in five adults live with this condition. And the effects extend well beyond the stock market. The growing popularity of GLP-1 treatments has influenced everything from local healthcare supply chains to dining culture, with some Dubai restaurants now offering smaller portion menus to cater to those using appetite-suppressing drugs.
For investors, GLP-1 drugs still represent one of the most exciting stories in healthcare. Even though the sector has faced a bit of a reality check lately following its exceptional run, the bigger picture is that global demand is growing fast, including here in the Middle East. The companies leading this revolution are still shaping one of the biggest shifts we’ve seen in healthcare for years.
This communication is for information and education purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without taking into account any particular recipient’s investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication.