Take makers of devices that treat conditions associated with diabetes for instance. As patients drop pounds by taking a new class of drugs like Ozempic and Wegovy — known as GLP-1s — there’s a likelihood that diabetes cases may decline. That’s great for health outcomes, but poses a demand issue for device makers, where investors are already choosing sides.
Wall Street’s hankering for weight-loss medications like Wegovy has buoyed drugmakers Novo Nordisk A/S and Eli Lilly & Co. But an August study update showing Novo Nordisk’s Wegovy reduces heart-related risks sent diabetes device makers plummeting. To be sure, these stocks could still see a rebound. As a combination of side-effects and usage risks begin to confront prescribers and patients alike, chances are that the stocks may go back up, analysts say. Investors could also start to place bets on a turnaround story as soon as early 2024 if the stocks continue to sell off.