The anti-obesity drug market is expected to remain in the spotlight this year after a bumper 2023 for weight loss drug makers Novo Nordisk and Eli Lilly, according to Berenberg. The Germany-based investment bank expects that a combination of new clinical data and the expiration of Novo's patent for the active ingredient in first-generation GLP-1 drugs will create new opportunities for several generic drugmakers in Europe. GLP-1 medications stimulate the production of hormones that cause weight loss by reducing appetite. Patent protection is expected for Novo Nordisk's blockbuster weight-loss drug Wegovy, which contains the second-generation active ingredient GLP-1 and has been found to be at least twice as effective as the first-generation drug generation, expires at the end of the decade. Rising demand for this drug has boosted Novo stock by approximately 50% in 2023. However, Berenberg analysts believe the largest and most underappreciated opportunity in the near term lies with companies preparing to launch generic versions of the drugs. first generation GLP-1 drugs. For example, Novo Nordisk's Victoza patents expired in 2023, opening the door for companies like Teva and Sandoz to launch generics in the first half of 2024, according to the bank. The table below shows Berenberg's four buy-rated stocks with their upside potential. Sandoz is Berenberg's top pick for 2024. The analysts said: “Victoza could provide a boost to generic earnings growth in the near term, while confirming Sandoz's GLP-1 capabilities and longer-term pipeline.” term”. They expect sales to increase this year and see room for Sandoz to raise its profit margin forecast above 18-19%. Berenberg also highlighted Gerresheimer as a way to follow the GLP-1 trend. He expects the company's LPG-1 revenue to double in 2024 to more than €50 million ($54 million). Analysts expect the stock to rise 44.4% over the next 12 months. Sartorius and SKAN Group, Berenberg's “shadow” pick, are also expected to benefit from manufacturing GLP-1 generic drugs. The investment bank believes that Sartorius will benefit from the growing commercialization of GLP-1 drugs and predicts that its shares will rise 27% in the next 12 months. As for SKAN, which is also listed in the United States, the bank's analysts said: “We continue to believe that SKAN is a clear but hidden beneficiary of LPG-1-related spending, particularly after recent capital expenditure announcements from its customers to focus on the filling and arrival lines. Correction: This article has been updated to reflect that Novo Nordisk's second-generation drug has been found to be at least twice as effective as the first-generation drug.
