ETFs
EXCLUSIVE: GLP-1 Weight Loss Drugs Could Become a Trillion-Dollar Market, Predicts Tema CEO ETFs – Alnylam Pharmaceuticals (NASDAQ: ALNY), AbbVie (NYSE: ABBV)
The market for GLP-1 drugs to treat obesity is expected to skyrocket to $1 trillion or more, according to Pot of Mauritsfounder and CEO of Tema ETFs, who shared this optimistic forecast in a exclusive interview with Benzinga.
“Our view is that in the long term it is not a two-horse race between Eli Lilly Company LLY and Novo Nordisk A/S “NVO,” Maurits said, challenging the prevailing idea of a duopoly in the weight loss market.
Pot predicts that growing demand for weight loss treatments and expanded applications of GLP-1 drugs will drive this trillion-dollar market opportunity.
In November 2023, Tema ETFs launched the GLP-1, obesity and cardiometabolic ETF theme HRTS, the first ETF focused on weight loss. Since its inception, the fund has increased by 25%, slightly outperforming the S&P 500, as tracked by the SPDR S&P 500 Exchange Traded Fund TO SPY.
The ETF’s top holdings include: Eli Lilly and Company, Amgen Inc. AMGN, Novo Nordisk A/SAnd Alnylam Pharmaceuticals, Inc. ALNY, each with approximately 5-6% weight. The HRTS portfolio also includes over 40 other weight loss related companies.
Chart: Tema GLP-1, Obesity and Cardiometabolic ETF Outperforms S&P 500 Since Inception
Chart: Benzinga Pro
Weight Loss Treatments: Applications and Innovations on the Rise
Pot said GLP-1 drugs could soon find applications beyond weight loss, first in diabetes and heart, liver and kidney disease, and then potentially in treating diseases such as cancer, Alzheimer’s, Parkinson’s and other neurogenic diseases.
The conventional injection method is being challenged by new approaches focused on oral administration or reducing dosing frequencies. Innovations aim to make treatments less invasive, for example by switching from weekly injections to injections every two months, or much easier to manufacture, for example by producing oral tablets.
Obesity is a cause of various diseases such as diabetes, cardiovascular disease and cancer. Combating obesity could thus alleviate many health problems, thereby amplifying the commercial potential of GLP-1 drugs.
This market is expected to expand beyond Eli Lily And Novo Nordiskaddressing multiple therapeutic areas.
“We could see a world where half the world’s population is taking GLP-1 or other weight-loss drugs, but for different reasons, including primary prevention,” Pot noted, citing uses for obesity, diabetes and potentially even Alzheimer’s disease or cancer.
Projections behind the $1 trillion estimate
The global number of obese people is expected to double from 1 billion to 2 billion by 2035. Even without this growth, the current billion obese people represent a substantial market.
If long-term treatment reaches just 20 percent of the current obese population, a penetration rate similar to that of diabetes drugs, that would equate to 200 million people. Assuming a price reduction from $12,000 to $6,000 per person per year, the market for GLP-1 drugs could exceed $1 trillion, Pot said.
Goldman Sachs estimates the market at $100 billion to $130 billion, but Pot estimates it could be as much as $1 trillion before even considering speculative applications for cancer, Alzheimer’s and Parkinson’s. The market size is consistently underestimated, with estimates rising every few months.
Patent expirations will also influence the market. In the US, Ozempic/Wegovy’s patents will expire in 2032, in Europe in 2031 and in China in 2026.
“We think it will be a billion-dollar market before the patents expire,” Pot said.
Focus on small and mid caps
Asked why investors should focus on a diversified basket of weight-loss stocks rather than a few heavyweights, Pot explained that “the impact of positive clinical results in this huge market for small- and mid-cap biotechs is much higher” compared to larger companies such as Eli Lilly.
He stressed the importance of having mega-caps to balance a portfolio, but noted that smaller companies can offer higher returns over the long term.
Pot stressed that the biotech sector is ripe for mergers and acquisitions. Last year alone, 22 mergers and acquisitions in the biotech sector were completed with a value exceeding US$1 billion.
Large healthcare companies with no obesity-related business, such as Merck & Company Inc. MRK, Pfizer Inc. PFE, and Abbvie Inc. ABBV is likely to seek acquisitions.
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