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(Bloomberg) -- Disappointing trial results for Novo Nordisk A/S’s experimental obesity shot capped a volatile year for investors in drug developers vying for a piece of pharma’s hottest market.
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Novo shares are rebounding on Monday, but the Danish company has still lost about $70 billion in market capitalization this year. Rival Eli Lilly & Co., meanwhile, has added more than $170 billion to its market value amid huge demand for its Zepbound drug, while shares in smaller firms like Zealand Pharma A/S and Viking Therapeutics Inc. have soared as they made headway with their own obesity treatments.
More clarity around potential winners and losers may emerge next year, and the stakes are high — Goldman Sachs Group Inc. has estimated that obesity drugs could be a $130 billion market by 2030.
“Excitement will remain high,” said Chris Eccles, a portfolio manager at AXA Investment Managers, in an interview. Once there’s more clinical data for drugs currently in development, investors will be able to “cast a critical eye over who the real long-term winners will shake out to be.”
Here’s a roundup of developments this year and what to watch in 2025 (US prices are as of Friday’s close):
Eli Lilly (+32% YTD, market cap $729b)
Demand for Zepbound has been so big that Lilly boosted its annual revenue forecast twice this year, and is also investing to expand its manufacturing capabilities. However, its rapid ascent may be losing steam — particularly following an outlook cut in October. Investors are now watching for more data on its oral drug, orforglipron. “Having a highly efficacious oral small molecule drug which is well tolerated could be one way to address the issue with supply,” said Gregoire Biollaz, senior investment manager at Pictet Asset Management.
Novo Nordisk (-8.4% YTD, market cap $397b)
Until 2024, Novo shares had been on a tear for three years amid the success of its Wegovy and Ozempic shots. But competition has been rising and focus has shifted to next-generation drugs. The stock has been hit by disappointing safety data for a pill called monlunabant, a US Senate hearing on the pricing of key drugs, and the CagriSema results, which showed patients lost less weight than predicted.
Barclays Plc analysts are now watching for an update on a pill called amycretin, expected in the first quarter. Despite a not-so-hot year, some investors are staying positive. “We’re still optimistic on the outlook for Novo into 2025 and beyond as more supply comes on stream and there’s still strong demand for their products,” said Mark Denham, a fund manager and head of equities at Carmignac. Novo shares rallied as much as 10% on Monday.