We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The Obesity Pill Rush: Healthcare ETFs to Gain as FDA Nods to Novo Drug
Read MoreHide Full Article
Key Takeaways
Novo Nordisk won FDA approval for oral Wegovy, the first GLP-1 pill cleared for chronic weight management.
NVO's oral Wegovy is cheaper to produce, needle-free, no refrigeration, and priced near $149 monthly.
Healthcare ETFs like THNR may gain as demand rises in the intensifying obesity drug race.
The recent U.S. Food and Drug Administration (FDA) approval of Novo Nordisk’s (NVO - Free Report) oral obesity pill, Wegovy, marks a significant turning point in the fiercely competitive weight-loss drug market. This pill, the first GLP-1 tablet specifically cleared for chronic weight management, can materially improve NVO’s long-term profitability and cash flow visibility.
Amid an increasingly fierce obesity drug arms race against Eli Lilly (LLY - Free Report) and other big pharma rivals, this oral pill format offers obese patients a lower cost, more convenient alternative to injectable GLP 1s, thus potentially improving capacity utilization across NVO’s production footprint. This, in turn, should boost the Danish drugmaker’s profit margin.
This dynamic also creates a powerful tailwind for the broader healthcare exchange-traded funds (ETFs) with meaningful Novo Nordisk exposure. Therefore, investors seeking exposure to this growth story may consider looking at ETFs as a strategic way to capitalize on Novo Nordisk's momentum while managing the specific risks associated with the stock itself.
Inside the FDA Approval: Oral Wegovy, a New Game Changer
The FDA's green light for Novo Nordisk's oral version of Wegovy (semaglutide) represents a monumental leap for obesity treatment. The pill is touted as a game-changer because it is cheaper to produce, does not require refrigeration, and offers a needle-free option compared with its injectable predecessor. For these traits, it is expected to experience expanded market reach.
The drug, a GLP-1 receptor agonist, has demonstrated impressive efficacy in clinical trials, helping patients achieve significant weight loss. Evidently, in a 64-week clinical trial, participants taking the daily pill lost an average of 16.6% of their body weight, matching the results of the injectable form of Wegovy.
In terms of cost, NVO has set the price for a month's supply at approximately $149 without insurance, positioning it as a more accessible option for patients.
The increased accessibility, reasonable pricing, and patient preference for pills over injections could drive unprecedented demand for Wegovy, cementing Novo Nordisk’s dominant position in the highly competitive obesity drug market.
With Wegovy being the first and only FDA-approved oral GLP-1 pill currently available in the U.S. market, Novo Nordisk is well-positioned to significantly expand its consumer base and drive future profitability, given the fact that obesity prevalence among U.S. adults stands at 40.3% (between August 2021 and August 2023, as per Centers for Disease Control and Prevention data).
Healthcare ETFs Over NVO
Considering Wegovy’s potential, Novo Nordisk stock might seem an attractive investment destination. But direct investment in the stock carries notable risks that make ETFs a more prudent choice for many investors.
A notable concern for Novo Nordisk that has worried investors in recent times has been its supply-chain constraints and manufacturing bottlenecks, which have limited the availability of its popular injectable GLP-1 drugs. Any such headwind could re-emerge in the near future and may disproportionately pressure NOV’s stock price in the short term, even amid broader sector growth.
Since ETFs provide exposure to the broader innovation within the obesity and metabolic health sector, investing in an ETF spreads risk through diversification while still capturing growth.
Healthcare ETFs to Gain
Considering the aforementioned discussion, one may consider the following healthcare ETFs that hold Novo Nordisk alongside other healthcare companies, which provide a built-in buffer against single-stock risk, allowing investors to benefit from the sector's tailwinds with greater stability.
This is an actively managed fund, with assets under management worth (AUM) $45.9 million, providing exposure to 23 companies involved in the manufacturing of weight loss drugs, including GLP - 1 agonists. Of these, NVO holds the first position, with 19.81% weightage in the fund.
OZEM has surged 45.9% year to date. The fund charges 59 basis points (bps) as fees.
Amplify Weight Loss Drug & Treatment ETF (THNR - Free Report)
This fund, with assets of $2.87 million, provides exposure to 20 global companies expected to benefit economically from the development of weight-loss drugs. Of these, NVO holds the second position, with 12.55% weightage in the fund.
THNR has risen 15.9% year to date. The fund charges 59 bps as fees.
This fund, with assets worth $1.19 billion, provides exposure to 26 largest most liquid pharmaceutical companies. Of these, NVO holds the fourth position, with 6.59% weightage in the fund.
PPH has surged 23.1% year to date. The fund charges 36 bps as fees.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
The Obesity Pill Rush: Healthcare ETFs to Gain as FDA Nods to Novo Drug
Key Takeaways
The recent U.S. Food and Drug Administration (FDA) approval of Novo Nordisk’s (NVO - Free Report) oral obesity pill, Wegovy, marks a significant turning point in the fiercely competitive weight-loss drug market. This pill, the first GLP-1 tablet specifically cleared for chronic weight management, can materially improve NVO’s long-term profitability and cash flow visibility.
Amid an increasingly fierce obesity drug arms race against Eli Lilly (LLY - Free Report) and other big pharma rivals, this oral pill format offers obese patients a lower cost, more convenient alternative to injectable GLP 1s, thus potentially improving capacity utilization across NVO’s production footprint. This, in turn, should boost the Danish drugmaker’s profit margin.
This dynamic also creates a powerful tailwind for the broader healthcare exchange-traded funds (ETFs) with meaningful Novo Nordisk exposure. Therefore, investors seeking exposure to this growth story may consider looking at ETFs as a strategic way to capitalize on Novo Nordisk's momentum while managing the specific risks associated with the stock itself.
Inside the FDA Approval: Oral Wegovy, a New Game Changer
The FDA's green light for Novo Nordisk's oral version of Wegovy (semaglutide) represents a monumental leap for obesity treatment. The pill is touted as a game-changer because it is cheaper to produce, does not require refrigeration, and offers a needle-free option compared with its injectable predecessor. For these traits, it is expected to experience expanded market reach.
The drug, a GLP-1 receptor agonist, has demonstrated impressive efficacy in clinical trials, helping patients achieve significant weight loss. Evidently, in a 64-week clinical trial, participants taking the daily pill lost an average of 16.6% of their body weight, matching the results of the injectable form of Wegovy.
In terms of cost, NVO has set the price for a month's supply at approximately $149 without insurance, positioning it as a more accessible option for patients.
The increased accessibility, reasonable pricing, and patient preference for pills over injections could drive unprecedented demand for Wegovy, cementing Novo Nordisk’s dominant position in the highly competitive obesity drug market.
With Wegovy being the first and only FDA-approved oral GLP-1 pill currently available in the U.S. market, Novo Nordisk is well-positioned to significantly expand its consumer base and drive future profitability, given the fact that obesity prevalence among U.S. adults stands at 40.3% (between August 2021 and August 2023, as per Centers for Disease Control and Prevention data).
Healthcare ETFs Over NVO
Considering Wegovy’s potential, Novo Nordisk stock might seem an attractive investment destination. But direct investment in the stock carries notable risks that make ETFs a more prudent choice for many investors.
A notable concern for Novo Nordisk that has worried investors in recent times has been its supply-chain constraints and manufacturing bottlenecks, which have limited the availability of its popular injectable GLP-1 drugs. Any such headwind could re-emerge in the near future and may disproportionately pressure NOV’s stock price in the short term, even amid broader sector growth.
Since ETFs provide exposure to the broader innovation within the obesity and metabolic health sector, investing in an ETF spreads risk through diversification while still capturing growth.
Healthcare ETFs to Gain
Considering the aforementioned discussion, one may consider the following healthcare ETFs that hold Novo Nordisk alongside other healthcare companies, which provide a built-in buffer against single-stock risk, allowing investors to benefit from the sector's tailwinds with greater stability.
Roundhill GLP-1 & Weight Loss ETF (OZEM - Free Report)
This is an actively managed fund, with assets under management worth (AUM) $45.9 million, providing exposure to 23 companies involved in the manufacturing of weight loss drugs, including GLP - 1 agonists. Of these, NVO holds the first position, with 19.81% weightage in the fund.
OZEM has surged 45.9% year to date. The fund charges 59 basis points (bps) as fees.
Amplify Weight Loss Drug & Treatment ETF (THNR - Free Report)
This fund, with assets of $2.87 million, provides exposure to 20 global companies expected to benefit economically from the development of weight-loss drugs. Of these, NVO holds the second position, with 12.55% weightage in the fund.
THNR has risen 15.9% year to date. The fund charges 59 bps as fees.
VanEck Pharmaceutical ETF (PPH - Free Report)
This fund, with assets worth $1.19 billion, provides exposure to 26 largest most liquid pharmaceutical companies. Of these, NVO holds the fourth position, with 6.59% weightage in the fund.
PPH has surged 23.1% year to date. The fund charges 36 bps as fees.