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Several drugmakers have been thriving on the ongoing weight-loss trend, with Denmark's Novo Nordisk and Eli Lilly standing out in particular.

With over a billion obese individuals globally and many obesity-related cancers and diabetes cases in the US, weight loss drugs have become a thriving commodity. This trend, accelerated by the power of social media, has spurred pharmaceutical companies to develop weight-reduction drugs, and some of them are doing very well. According to Morgan Stanley, the weight loss drug market is expected to reach $77 billion in 2030, and these two stocks will likely play a key role in the industry.

Novo Nordisk

One is Novo Nordisk (NVO), a Denmark-based pharmaceutical company. The drugmaker made headlines earlier this year when trial reports showed that its weight-loss drug Wegovy helped lower the risk of heart attack or stroke in obese and overweight patients by 20%. The figure notably exceeded expectations. 

The positive results raised hopes that major insurance companies and the US government program Medicare could begin coverage of Wegovy, already approved by the FDA. Further evidence of the drug’s effectiveness and health benefits would likely increase its demand. 

Should Wegovy obtain insurance coverage, its current cost of $1,349 per month would likely get reduced significantly, potentially further boosting Novo Nordisk’s profits and stock price. The company’s stock is already up over 38% year-to-date, thanks to the success of its diabetes drug Ozempic. 

TipRanks data shows that the average analyst price target for Novo’s shares is $108.5, implying a nearly 8% upside from its current price of $100.5. The company’s stock is already up over 46% in 2023. 

Eli Lilly

Another drugmaker capitalizing on the recent weight loss trend is the industry giant Eli Lilly (LLY). Last year, the FDA approved the company’s diabetes drug Munjaro, which analysts believe could reinforce Eli Lilly’s position in that market. 

In a recent report, analysts at BMO Capital Markets noted “unprecedented potential” for Eli Lilliy’s A-list group of drugs, including Mounjaro, oral orforglipron, and the next-gen retatutide. The investment firm holds an outperform rating on Lilly shares, with a target price of $633. Its shares are currently priced at $607.2 apiece, up 66% this year. 

Moreover, consensus analysts expect the drugmaker’s top line to grow at a compound annual growth rate (CAGR) of 24% through 2028. As the company’s Mounjaro continues to attract more attention, some analysts expect Lilly to post top-end annual revenue of $25 billion in 2023. 

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