Two of the biggest names in the pharmaceutical industry right now are Eli Lilly(NYSE: LLY) and Novo Nordisk(NYSE: NVO). Each company is at the forefront of the red-hot weight-loss market due to their innovative roster of diabetes medications.
Both companies develop glucagon-like peptide-1 (GLP-1) drugs, including Mounjaro, Ozempic, and Rybelsus. While these blockbuster drugs are not formally approved for chronic weight management by the Food and Drug Administration (FDA), losing weight can often be a byproduct. As such, demand for these diabetes treatments has been rocketing off the charts.
Despite returns of over 50% from each stock in 2023, data suggests that the ride could just be getting started for investors.
Image Source: Statista
The diabetes population is expected to rise significantly
According to the International Diabetes Federation, 10.5% of the global adult population was diabetic in 2021. The chart above shows that this figure is expected to rise to 12.2% by 2045. To help quantify this figure, related studies have indicated that there will be 1 billion diabetics globally by 2050.
Considering Novo Nordisk's and Lilly's combined dominance of the GLP-1 market, the forecasts above could bode well for each pharma giant in the long-run. What's even more encouraging is that both companies are already planning for long-term growth.
Eli Lilly has recently been scaling up its manufacturing capabilities in order to fulfill demand for Mounjaro. Similarly, earlier this month Novo Nordisk made a savvy move of its own by acquiring Catalent for $16.5 billion to help bolster production efforts for Ozempic.
While Lilly and Novo Nordisk certainly have some momentum pushing the stock higher, I think they can both keep it up. The trend above highlights that the diabetes market is not only expected to grow significantly, but it should expand for many years to come.
Considering Mounjaro has only been commercially available for less than two years, and Novo Nordisk is making hefty investments to scale Ozempic, I think the potential for each of these companies in the diabetes market is just starting to scratch the surface.
I see both companies continuing to benefit for the long haul and think that now is a terrific opportunity to scoop up shares using dollar-cost averaging.
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Adam Spatacco has positions in Eli Lilly and Novo Nordisk. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
