Live off the Fat of the Land With These Two Stocks

Live off the Fat of the Land With These Two Stocks

Posted On August 16, 2023 10:30 am

The Merriam-Webster dictionary defines the idiom “to live off the fat of the land” this way: “to live very well by enjoying the best things that are available without having to work hard to get those things.”

Investors can do this literally and sit back and watch their money grow, without doing much work, by investing into the best companies that are producing drugs to combat obesity.

There are two pharmaceutical powerhouses leading the way in this sector. Let me show you why I am so bullish on these stocks.

Blockbuster Trial Results

The companies in question are Denmark’s Novo Nordisk (NVO) and Eli Lilly (LLY). On August 8, Novo Nordisk announced that its best-selling obesity drug, Wegovy, cuts the risk of heart attacks and strokes. This is according to the findings of a late-stage trial, which sent shares in the company and its main rival, Eli Lilly, to record highs.

The study’s preliminary results found that patients who took Wegovy had a 20% lower chance of suffering a cardiovascular event than those who received a placebo. The full results of the trial will be presented at a conference later in 2023.

Novo Nordisk said the Wegovy trial, which enrolled 17,604 adults aged 45 or older, had achieved its primary objective by showing a statistically significant reduction in major cardiac events for patients who received 2.4 milligrams of the drug semaglutide (the main ingredient in Wegovy), compared with those who took the placebo.

Most researchers had assumed that Wegovy would automatically improve patients’ hearts as they lost weight. However, Nordisk can now point out that, until now, there had been no approved weight management drug that also reduced the risk of heart attack and stroke. These trial results will indeed pressure both health systems and private health insurers to cover this new class of weight-loss drugs, called GLP-1 agonists, that were developed by Nordisk and Lilly.

Nordisk expects to file for regulatory sign-off to expand Wegovy’s approved uses, showing that it can reduce cardiac risks, in the U.S. and the EU later this year.

Here in the U.S., a number of health insurers have been reluctant to cover weight-loss drugs for two reasons. The first is their high cost—the list price of Wegovy is around $1,350 a month. The second reason is the sheer number of people who qualify to take the drug: obesity affects about 40% of the population.

Expanding insurance coverage for Wegovy, as well as Lilly’s diabetes drug, Mounjaro (expected to be approved to treat weight loss this autumn) could unlock a more than $150 billion-per-year obesity market by the start of the next decade.

These two pharmaceutical companies will turn into…

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