8 pharmaceutical stocks that have potential, according to an ETF expert
GLP-1 weight loss drugs like Ozempic and Wegovy have taken the healthcare industry by storm.
Wall Street sees enormous growth potential for the industry and a positive impact on the GDP of the respective countries.
Christian Magoon, CEO of Amplify ETF, names his 8 best healthcare stocks.
Ozempic, Wegovy, Mounjaro, Zepbound – these drugs, once intended for diabetics, are now on everyone’s lips because they are increasingly used for other purposes: primarily for weight loss.
GLP-1 drugs that help people lose weight have experienced a real boom recently. Wall Street is very positive about their potential. Goldman Sachs estimates that the global market for weight-loss drugs will explode in the coming years: from the current 6 billion US dollars (5.5 billion euros) to 100 billion US dollars (90.5 billion euros) in 2030.
For Christian Magoon, CEO of the Amplify ETF, this is the perfect opportunity for investors to get into this market. He explains why he is so optimistic about the healthcare sector and names his top investments.
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Wall Street is betting big on GLP-1 drugs
According to the CDC, more than 40 percent of the adult US population, or more than 100 million people, are obese. In Germany, lAccording to an RKI study According to the 2019/2020 survey, 46.6 percent of women and 60.5 percent of men were overweight (including obesity). Almost a fifth of adults (19 percent) are obese.
This is leading to massive demand for drugs like Ozempic and Wegovy, Magoon said. In fact, these GLP-1 drugs are in short supply nationwide, which Magoon sees as another indicator of their continued success.
“This could be the largest drug category ever,” says Magoon.
Magoon is not the only one who believes in the enormous potential of weight loss drugs – Goldman Sachs assumes that they will increase the US gross domestic product by as much as one percent in the coming years. The reason for this is because GLP-1 drugs increase labor force participation and enable people to live longer and healthier lives.
Although GLP-1 drugs are best known for weight loss, they have even greater potential in other areas of healthcare. Research is constantly discovering new applications in cardiovascular disease, sleep apnea, Alzheimer's, Parkinson's and kidney disease.
With a total population of about 330 million Americans, of whom about 38 million have diabetes, 140 million have obesity and 122 million have cardiovascular disease, there is a huge addressable market for GLP-1 drugs, Magoon said, comparing the impact of GLP-1 drugs on healthcare to the impact of AI on the tech industry.
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This is how you can invest in the weight loss injection:
“If you invest in the overall market and own the S&P, you only have about three to three and a half percent exposure to these GLP-1 specific companies,” Magoon said, stressing the need to highlight certain companies in his portfolio.
Since the industry is still in its infancy, Magoon says investors should expect a lot of innovation and mergers. He therefore recommends investing in the entire GLP-1 drug value chain, from pharmaceutical companies to third-party drug developers. This way, investors get diversified exposure to this growing area of the healthcare sector. Below, Magoon presents eight possible investments in GLP-1 drugs. They are all included in the Amplify Weight Loss Drug & Treatment ETF.
Manufacturers of GLP-1 drugs How Novo Nordiskmanufacturer of Ozempic and Wegovy, and Eli Lillymakers of Mounjaro and Zepbound, are currently the largest players in the weight loss space, accounting for 98 percent of GLP-1 sales by 2023.
But the business with weight loss injections does not only have one winner. Magoon also has high hopes for Viking Therapeutics, Pfizer and Roche. These companies may be smaller than Novo Nordisk and Eli Lilly, but Magoon stresses that they have new technologies in the pipeline that could dramatically boost the industry and drive up stocks. Swiss pharmaceutical company Roche has developed a weight-loss drug in pill formwhich has shown promising results in clinical trials. This could drastically change the existing GLP-1 market, which is dominated by injectables.
Magoon also presents his favorites for outsourced manufacturing and development of GLP-1 drugs. These are outside contractors that work with the pharmaceutical companies mentioned above to assist them with product development, formulation, packaging and distribution. You might not expect a film company to have much to do with weight loss drugs, but Fujifilm helps in the production and filling of injection pens. Gerresheimer is another manufacturer of injection pens. Thermo Fisher measures and analyses these drugs and has been engaged by Novo Nordisk as a contract manufacturer for Wegovy.
This article was translated from English. The original can be found here.