Pfizer Inc. (PFE): Should You Add This GLP-1 and Weight Loss Stock to Your Portfolio Now?

We recently compiled a list of Top 10 GLP-1 and Weight Loss Stocks to Buy Now. In this article, we’ll look at where Pfizer Inc. (NYSE:PFE) stands relative to other GLP-1 and weight loss stocks.

According to the WHO, more than a billion people worldwide are obese, including 650 million adults, 340 million adolescents and 39 million children. A completely new class of weight-loss drugs that do not require dieting or intense exercise seems revolutionary. With these breakthrough drugs, overweight or obese people can reduce their body weight by 15 to 20 percent. “This could be the biggest opportunity we’ve ever seen in the pharmaceutical industry,” says Andy Acker, portfolio manager at Janus Henderson Investors. There’s no doubt that weight-loss drugs are popular. Investors are comparing the American pioneer of weight-loss drugs to the leader in artificial intelligence chips.

Given this strong demand, Morgan Stanley Research now predicts that the global market for obesity drugs will reach $105 billion by 2030, up from a previous estimate of $77 billion. By 2023, branded obesity drugs generated $6 billion in sales.

In 2023, the market leader in obesity medications, Semaglutide (the generic name for Ozempic, Wegovy, and Rybelsus), was the most prescribed Glucagon-Like Peptide-1 GLP-1 agonist, accounting for over 88% of all new prescriptions, according to Forbes. The only GLP-1 weight management drugs that have received FDA approval to date are tirzepatide, liraglutide, and semaglutide.

JP Morgan Research estimates that the GLP-1 market will reach $100 billion by 2030, driven in equal parts by diabetes and obesity. By 2030, there could be 30 million GLP-1 users in the United States, or about 9% of the total population. The growing demand for obesity drugs will have a far-reaching impact, benefiting sectors such as biotech while generating headwinds for others, including food and beverage.

Chris Schott, senior analyst covering the diversified biopharmaceutical sector in the United States, said:

“GLP-1s have been used to treat type 2 diabetes since 2005, starting with the approval of Byetta, and subsequent products have continually improved their efficacy. The most recent, Ozempic and Mounjaro, offer significant advantages over previous products and have accelerated the growth of the class,” “Indeed, the latest generations of GLP-1s and combinations result in weight loss of 15-25%+ on average, well above previous generations of products.”

When it comes to treating obesity, some are calling the new generation of GLP-1 drugs “wonder drugs.” However, GLP-1s are not available to all obese patients because of their high cost and limited insurance coverage. According to Jonathan Gruber, professor of economics and chair of the MIT Department of Economics, if 40 percent of obese Americans were to take these treatments at today’s prices (about $15,000 per person), the annual cost would exceed $1 trillion. That’s almost the same amount the government spends on the entire Medicare program. It’s a staggering number.

Over the past decade, the use of GLP-1 drugs, such as semaglutide, for weight loss has doubled, but among people with type 2 diabetes, its use has declined by nearly 10 percent, according to a study published Monday in the Annals of Internal Medicine. The prolonged drug shortage that followed, the researchers warn, could limit the availability of the drugs to people with diabetes. Dr. Yee Hui Yeo, a clinical scientist in the Karsh Division of Gastroenterology and Hepatology at Cedars-Sina, stressed that as demand for obesity medications increases, it is critical to ensure that diabetic patients have access to GLP-1 drugs.

The FDA says the shortages are the result of growing demand. The shortages aren’t just impacting the United States: The European Medicines Agency has warned that the GLP-1 drug shortage is a “major public health problem” that’s unlikely to be resolved in 2024. People with diabetes are struggling to get their prescriptions filled because of the shortages, with some limiting how they manage their medications, according to NPR.

Panelists on the “Weighing the Future of Obesity Drugs” panel, including Debra Netschert of Jennison Investments, Julia Angeles of Baillie Gifford, and Gentry Lee of Fayez Serofim, discussed the potential of GLP-1 drugs, which were originally developed to treat diabetes but are now being used to treat obesity. Netschert highlighted the progression of GLP-1 drug administration from weekly doses to multiple daily injections, as well as ongoing attempts to further reduce the frequency of injections and minimize adverse effects. Netschert noted that 1.5 million of the 110 million eligible patients in the United States are currently on treatment with GLP-1 drugs, despite their exceptional performance, due to production limitations. Netschert and Angeles argued over who pays the costs, with Angeles claiming that the majority of patients pay out-of-pocket while Netschert cited significant reimbursement from Medicare/Medicaid and insurance. Netschert said that outside the U.S., the drugs could be needed by 700 million people worldwide. Notably, the panel found that Britain’s typically strict payers approved GLP-1 drugs faster than any other country, underscoring their perceived value.

The obesity drug market is a fast-growing industry and since it’s still in its early stages, now might be a good time to add some weight loss stocks to your watchlists.

Our methodology

We combed through exchange-traded funds (ETFs) and online rankings to come up with an initial list of 20 weight loss and GLP-1 stocks. We then selected the 10 stocks most popular with institutional investors. The stocks are ranked in ascending order of the number of hedge funds that hold stakes in them.

We used companies’ year-over-year revenue growth as a tiebreaker in cases where two or more stocks had the same number of hedge fund holders. Additionally, we only considered stocks that received buy or strong buy recommendations from analysts.

Why do we care about stocks that hedge funds are heavily invested in? The reason is simple: Our research has shown that we can outperform the market by mimicking the best stock picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming its benchmark by 150 percentage points.see more details here).

Pfizer Inc. (NYSE:PFE)

Number of investors in hedge funds: 77

Pfizer Inc. (NYSE: PFE) is a global biopharmaceutical company that researches, develops, manufactures, markets, distributes and sells biopharmaceutical products in Europe and the United States.

Pfizer Inc. (NYSE:PFE) recently confirmed it will continue development of danuglipron, an oral tablet that acts as a GLP-1 agonist and is used to treat weight loss. The move comes after a Phase 2 trial of the twice-daily formulation met efficacy targets despite a high rate of patient withdrawals due to adverse events.

One notable improvement is that the once-daily form of danuglipron shows no signs of liver damage. Pfizer still lags behind the two market leaders, whose drugs like Zepbound and Wegovy dominate the weight-loss market. Pfizer’s new formulation strives to address the common medical need of obesity, but it faces competition from many other candidates in clinical trials.

Pfizer reported revenue of $14.9 billion in the first quarter of 2024, down 19% from the prior year. Adjusted EPS was $0.82, while reported EPS was $0.55. The company’s other revenue increased 11%, while COVID-related revenue declined. Only over $1 billion of Pfizer’s revenue came from its massive M&A activity in the first quarter of 2024, which included nearly $70 billion in purchases. The company estimates that over time, M&A will generate $25 billion, while new items introduced will generate $20 billion.

Pfizer’s diet pill portfolio is expanding in the competitive GLP-1 market by studying two other pills alongside danuglipron. Over time, the launch of these therapies could impact revenue growth for the major players in the market. Tirzepatide (Mounjaro and Zepbound) and semaglutide (Ozempic and Wegovy), which now dominate the weight loss market, have set high standards, with tirzepatide demonstrating an average weight reduction of approximately 21% and semaglutide approximately 15%. Danuglipron, marketed by Pfizer, faces competition from existing competitors as well as companies developing GLP-1 agonists.

According to analysts, PFE has a consensus rating of Buy. As of Q1 2024, 77 out of 920 hedge funds reported holdings in Pfizer Inc. (NYSE:PFE). Beech Hill Partners, led by Paul Cantor, Joseph Weiss, and Will Wurm, is the company’s largest shareholder, with 102,788 shares worth $66.995 million.

In summary, Pfizer remains a distant competitor in the crowded GLP-1 market, despite its encouraging interest in a once-daily formulation of danuglipron. Compared with its efforts in weight-loss drugs, the company’s significant M&A activity and encouraging pipeline may present more reliable growth paths.

Global PFE ranks 2nd on our list of the best GLP-1 and weight loss stocks to buy. You can visit Top 10 GLP-1 and Weight Loss Stocks to Buy Now to see other GLP-1 and weight loss stocks that are on hedge funds’ radar. While we recognize PFE’s potential as an investment, our conviction lies in the belief that certain AI stocks have more promise to deliver higher returns, and in a shorter time frame. If you’re looking for an AI stock that has more promise than PFE but is trading at less than 5x earnings, check out our report on the the cheapest AI stock.

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Disclosure: None. This article was originally published on Insider Monkey.