Oct 27 (Reuters) – Healthcare firms who revenue from treating overweight and obese sufferers are attempting to persuade traders that highly effective new weight-loss medication will not shrink their companies.

The international marketplace for weight problems medication might attain as a lot as $100 billion inside a decade as a result of effectiveness of Novo Nordisk’s (NOVOb.CO) Wegovy and comparable medicines.

Such forecasts have prompted a sell-off in a variety of firms from makers of bariatric surgical procedure gadgets to firms whose merchandise handle the well being points created by extra weight, from diabetes to sleep apnea.

However, these firms and analysts level to the excessive costs of the weight-loss medication, uncertainty over long-term utilization and the potential lack of insurance coverage protection for the prices as doubtlessly limiting the marketplace for them in the long term.

“The market is in a shoot-first, ask-questions-later mood when it comes to weight-loss drugs,” mentioned Nicholas Anderson, supervisor of the Thornburg International Growth Fund, which holds shares of Novo Nordisk. “What’s less clear on the losers side is who will actually be affected and how long will it take to show up in numbers.”

Shares of Danish drug firm Novo Nordisk are up 28% within the final three months. Eli Lilly (LLY.N), which is predicted to quickly introduce its personal weight-loss drug Mounjaro, is up 25%, ballooning its market worth to greater than $550 billion, making it the world’s most useful well being care firm.

By distinction, the iShares U.S. Medical Devices exchange-traded fund has misplaced greater than 22% within the final three months.

Injectable weight-loss medication, generally known as GLP-1 receptor agonists, are thought-about extremely efficient however are additionally costly, costing greater than $1,300 monthly. Some opponents have questioned the potential attain of the GLP-1 market.

“We expect it will take at least a decade to reach peak penetration of these products in the indicated population,” Kenneth Stein, Boston Scientific’s international chief medical officer, informed traders on Thursday, including that solely a minority of overweight American sufferers will use the medication. Boston Scientific (BSX.N) mentioned the impact on the corporate’s coronary heart gadgets can be “very limited.”

Margaret Kaczor Andrew, a William Blair analyst overlaying medical expertise firms, says she doesn’t anticipate a significant impact on applied sciences like glucose displays, which assist handle diabetes. She pointed to the emergence of different drug lessons like statins that had diminished heart problems however not decreased the necessity for coronary heart gadgets.

“Ultimately, it does not impact device utilization,” she mentioned.

Michael Farrell, CEO of Resmed (RMD.N), which makes gadgets to deal with sleep apnea, mentioned on an investor name Thursday that the corporate is “tracking many thousands of patients on GLP-1 and we’re seeing maintenance of adherence. We’re seeing maintenance of resupply programs and really no change.”

WAIT AND SEE

Some traders mentioned the medication might scale back the necessity for invasive weight-loss procedures like bariatric surgical procedure.

“It seems very natural for people to try the drugs, see about the weight loss they get, and how long-lasting it is and then delay bariatric surgery or avoid it all together,” mentioned Jeff Jonas, portfolio supervisor at Gabelli Funds.

Johnson & Johnson (JNJ.N) mentioned third-quarter medical system gross sales fell in need of analyst estimates resulting from a slowdown in gadgets utilized in bariatric surgical procedures.

Yet solely about one-third of sufferers prescribed a weight-loss drug like Wegovy have been nonetheless taking it a 12 months later, Reuters reported in July, citing an evaluation of pharmacy claims knowledge.

“We expect that many of them will not stay on the drug for longer than a year or two, and at that time, will consider bariatric surgery,” Myriam Curet, chief medical officer at Intuitive Surgical (ISRG.O), mentioned on the corporate’s Oct. 19 earnings name. “Overall, we’ll see an increased interest in bariatric surgery, but that will get delayed in the short term.”

The weight-loss medication’ price and uncertainty about whether or not their use will enhance the long-term well being of sufferers and scale back healthcare spending will restrict near-term growth of insurance coverage protection, mentioned Ann Hynes, a healthcare companies analyst at Mizuho Securities.

She lately held a name for traders with two well being insurers with perception on company well being plans.

“Nothing is going to change in ’24. If anything, I think (insurance) access is going to get stricter. It could evolve in 2025, 2026,” Hynes mentioned.

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