Pharmaceutical shares haven't met their demise, but why might Novo Nordisk and Eli Lilly be facing bankruptcy?
Investing in Pharmaceuticals Amidst Tariffs: Opportunities in Novo Nordisk and Eli Lilly
The pharmaceutical industry, like many others, has felt the weight of tariffs. This strain, particularly on Novo Nordisk and Eli Lilly, has resulted in a decline in their stocks over time. Yet, this dip could provide a window of opportunity for savvy investors.
Tariffs and Undervaluation
Donald Trump's tariffs have taken a toll on Novo Nordisk and Eli Lilly, accelerating a sell-off that had been lingering. However, this turbulence may have led to undervaluation, especially in the case of Novo Nordisk's stock. In 2023, its P/E ratio soared to over 37, but it now stands at a more attractive 19. Eli Lilly, too, has moved away from its all-time high achieved in August 2024.
Weight Loss Drugs: Boom Ahead?
Despite the market downturn, the hype surrounding popular weight loss medications persists. For instance, the successors and further developments of drugs like Wegovy (Novo Nordisk) and Zepound (Eli Lilly) might stir excitement among investors. Goldman Sachs forecasts that the market for these drugs could reach a staggering $100 billion by 2030.
With market-leading positions, companies like Novo Nordisk and Eli Lilly could potentially reap a significant portion of these profits. So, investors may wish to capitalize on the tariff-induced discount.
A Warning and an Alternative
While investing might seem enticing, experts caution against jumping in too early. The stock market crash may not yet be over, and the best time to buy back in remains uncertain. For a deeper dive into navigating tax losses after a market crash, check out our article, "After the Stock Market Crash: How to Optimally Offset Course Losses for Tax Purposes."
Insights:
- Novo Nordisk, while facing setbacks, still holds a strong position in the GLP-1 market, especially with drugs like Ozempic and Wegovy.
- Eli Lilly has seen robust growth in the weight loss and diabetes drug market, driven by treatments like Mounjaro and tirzepatide.
- Tariffs can potentially impact profitability and investor sentiment, leading to lower P/E ratios if companies face additional costs or trade barriers.
- The weight loss drug market boasts substantial growth potential, fueled by demand and successful product launches.
Conflict of Interest NoticeThe CEO and majority shareholder of the publisher Börsenmedien AG, Mr. Bernd Förtsch, has entered into direct and indirect positions in the financial instruments mentioned in the publication or related derivatives, which could benefit from the potential course development resulting from the publication.
Conflict of Interest NoticeThe author holds direct positions in the financial instruments mentioned in the publication or related derivatives, which could benefit from the potential course development resulting from the publication.
- Despite the overvaluation of Novo Nordisk's stocks in 2023, with a P/E ratio of over 37, the current ratio of 19 indicates a possible undervaluation due to the tariffs, making it an attractive investment option.
- The turbulence caused by tariffs has resulted in a drop in the stocks of Novo Nordisk and Eli Lilly, but the decline could present an opportunity for investors, especially in the case of Novo Nordisk.
- The successors and further developments of popular weight loss medications like Wegovy (Novo Nordisk) and Zepound (Eli Lilly) may stir excitement among health-and-wellness investors, as Goldman Sachs predicts the market for these drugs could reach $100 billion by 2030.
- In light of the potential impact of tariffs, investors may wish to look into the financial sector and consider investments in companies like Novo Nordisk and Eli Lilly, which could potentially reap significant profits in the weight loss drug market.
- As the pharmaceutical industry, especially Novo Nordisk and Eli Lilly, faces the effects of tariffs, science and investing sectors will play crucial roles in analyzing the impact on these companies' profitability and stock prices.
