AstraZeneca, Novo Nordisk: anti-obesity drugs to lift companies that fill ‘skinny pens’

(Video Transcript)

Slimming demand set to create multi-billion-dollar market

Demand is booming for a self-injection, weight-loss drug and, by some estimates, the anti-obesity market could be worth some $100 billion within a decade. There are Novo Nordisk, Wegovy, Eli Lilly, VetBound, to name just a few in the market.

I can also tell you that AstraZeneca has also recently acquired in this space. There are also Amgen and Pfizer, all in this race to provide anti-obesity drugs. Now sales of Wegovy, the first of a new generation of obesity treatment, which mimics the body's appetite suppressing hormones. This is a drug made by Novo Nordisk, and which they've sold since its launch in the US in June 2021.

Demand soars despite unknown risks

What's interesting is that demand has soared despite the health experts warning that the risks are not yet known and despite the injections being relatively expensive for middle-income earners. We're talking about more than $1,000 for a month's supply. Demand is so high that even diabetes sufferers in need of similar drugs are finding it hard to get hold of their treatments.

So where is the salad dressing? Well if you think investing in these drug makers holds too much risk for you, think about exposure to the companies that make the injection pens instead. They're also known as skinny pens. Big drug makers making these anti-obesity drugs admit there is a huge shortage in so-called fill finish work.

Dire shortage of skinny pen injections

This is the process of filling fringes in sterile conditions to avoid contamination before these pens are then assembled, packaged and then shipped off to wholesalers like pharmacies and clinics. There is no pill version of this anti-obesity drug on the shelf just yet.

Companies like Catalan and Thermo, for example, just in the Thermo's chart here, they are behind a lot of the fill finish work that many drug companies, if they don't have the capacity, look to to fill this capacity in Catalan and Thermo. So Barclays, Ameth, Luke, Surgott are in a really good position, especially in the near-term until big drug makers can build their own fill finish facilities.