Why weight-loss 'wonder drugs' aren't 'wonder stocks' yet

Link copied

Why weight-loss 'wonder drugs' aren't 'wonder stocks' yet

stock :: 2025-09-05 :: source - yahoo finance

By Hamza Shaban

This is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:

The Chart of the Day
What we're watching
What we're reading
Economic data releases and earnings

The life-changing testimonials tied to GLP-1 weight loss and diabetes treatments and their potential to transform aspects of the healthcare system have elevated the new class of in-demand products to a kind of "wonder drug."

But the corporate names attached to them are hardly "wonder stocks."

Pricing has a lot to do with that.

Investors skeptical of buying in worry that the trajectory of GLP-1 pricing will diminish — and that prices per dose are now far too expensive. That has limited insurance companies and employers from expanding their coverage to include GLP-1s, even as the benefits for patients have become clear.

"'Wonder drugs' are few and far between, but we believe GLP1s should be added to the list," Bank of America research analysts led by Tim Anderson wrote in a report sent to clients on Thursday morning. "Yet investors in the space appear concerned — and the stock prices show it."

Shares of first mover Novo Nordisk (NVO) are down more than 30% so far this year. Competitor Eli Lilly (LLY) is lagging too, slipping around 3%, while the broader market has risen 10% in 2025.

But counterintuitively, the BofA team noted that GLP-1 drugs are actually not "expensive." At least not compared to the rest of the drug world. The problem lies with insurance.

Compared to the price of drugs for other chronic diseases, including arthritis and plaque psoriasis, the Bank of America analysts found that GLP-1 drugs aren't expensive in relative terms, despite popular criticisms — which stem largely from people paying out of pocket.

But the problem for insurance companies, the analysts argued, is the sheer number of patients who could benefit from taking the drugs — tens of millions of people in the US alone. That's a pool of patients far larger than almost all other disease categories, they noted, which will likely lead to unprecedented spending.

Seems logical. But perhaps investors and health plans can take a longer-term view. A fuller understanding of the cost-effectiveness of GLP-1 drugs should consider the savings they'll generate later from improved patient health. Where that savings goes, however, is another question.

A new wave of direct-to-consumer offerings will also determine if GLP-1 stocks will mount a comeback.

GoodRX (GDRX) last month announced it will offer both Novo Nordisk's Ozempic for diabetes and Wegovy for weight loss for $499 per month. Novo Nordisk CFO Karsten Munk Knudsen has said that out-of-pocket spending is "going to constitute a major part of the Wegovy business" and that the overall cash market for GLP-1s in the US is already above 10%.

An upcoming report from an influential nonprofit that analyzes the value of drugs will also have a say.

New findings from the Institute for Clinical and Economic Review on GLP-1s are expected to arrive as soon as next week, the analysts said, with a conclusion likely to tout the (holistic) cost-effectiveness of the drugs.

If employers are pressured to expand their coverage, that may help GLP-1 makers escape their Wall Street funk.

Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban.