Weight-loss drugs have sparked investor interest and shaken up other sectors over the past year. Novo Nordisk and Eli Lilly were two of the early winners of this trend, as their drugs dominate the weight-loss drug market. Yuri Khodjamirian, fund manager at Tema ETFs, said the two companies are a “very powerful duopoly.” “But there will obviously be room in such a large market. Current estimates are about $130 billion from Goldman Sachs. We think it will be multiples of that,” he told CNBC Pro Talks last week. Khodjamirian thinks there is room for at least three players in this space. “I think the market is big enough to sustain three or four players, even with the market caps that there are right now, but the market is trying to figure out who that third or fourth player is, and a big breakthrough could be oral GLP-1s,” he said. He was referring to GLP-1, a class of weight-loss drugs that was originally developed as a treatment for diabetes. GLP-1 is a hormone released in the gut that stimulates insulin secretion, slows stomach emptying and communicates a feeling of satisfaction to the brain. Khodjamirian mentioned Amgen, which is developing an injectable drug and other products for obesity. He also pointed to some biotech names with potential but that investors should be wary of. One of them is Carmot, which was acquired by pharmaceutical company Roche last year, he noted. He also mentioned smaller biotech companies such as Zealand Pharma and Viking Therapeutics. “These companies are early biotechs that are developing data. They are much riskier than the larger ones that already have drugs on the market,” Khodjamirian said. “And so you have to be very careful when making investments in these types of companies. So a diversified portfolio is probably the best way to go,” he said. Tema ETFs offers actively managed exchange-traded funds, with a focus on healthcare and life sciences. Khodjamirian is also the chief investment officer of Tema ETFs and manages its Monopolies & Oligopolies ETF, which seeks to provide investors with long-term growth through companies that operate in monopolistic industry structures. Khodjamirian highlighted three ETFs his firm manages that are in the healthcare industry: the Tema GLP-1, Obesity & Cardiometabolic ETF; the Tema Oncology ETF; and the Tema Neuroscience and Mental Health ETF. He said there is a “valuation opportunity” in biotech stocks right now, but warned of the risks. “Smaller companies in the biotech space are hard to pick. You have to really know what you’re doing, and … in most of our biotech portfolios, we have 50 stocks, we don’t own more than 1%, 2% in some of these companies because of these risks — they could go to zero,” he said. However, there are “a ton” of innovations in the biotech space, and “a lot of them” are trading below the cash value they have on their balance sheets, Khodjamirian said. “So there is a valuation opportunity,” he said.