Recently, in the process of US stock market rotation and the sharp drop in indexes, it seems that AI concept stocks are not the only ones that have been hurt - Eli Lilly's market value has also evaporated by more than $120 billion in just over a week. Its leading position in the craze for weight loss drugs is being threatened, as at least two competitors have recently made encouraging progress in their obesity treatment drugs.
Market data shows that the stock price of this leading company in the US pharmaceutical field fell by another 4.5% on Thursday, hitting the lowest level since May. In the past eight trading days, the company's stock price has plummeted by 14%, the worst 8-day span performance since 2020...
Meanwhile, Novo Nordisk, another weight loss drug leader, also fell by about 10% during the same period, with its market value evaporating by more than 40 billion US dollars.
Viking Therapeutics and Roche Holding AG updated encouraging weight loss drug trial data in the past week, which drove the decline in Eli Lilly's stock price. As competitors are getting closer to having viable competing drugs, investors believe that Eli Lilly and Novo Nordisk's duopoly in the obesity market may end.
It was previously predicted that by 2030, the weight loss drug market is expected to reach a scale of 130 billion US dollars.
Jared Holz, a healthcare expert at Mizuho, said, The assumption is that this is not a duopoly forever. I would expect these kinds of pretty violent reactions on the back of competitive trials to lessen over time.
Previously, Viking Therapeutics said on Wednesday night that the company is advancing its weight loss injection into the later stage of trials and is exploring monthly dosages. The company also said that starting from the fourth quarter, it will advance the oral version of the drug into the middle stage of trials.
Viking's stock price soared by 39% on Thursday, setting the best performance since February.
At the same time, Roche also said that after the experimental weight loss drug achieved encouraging results last week, the company is planning to speed up the development of obesity drugs.
Jeff Jonas, portfolio manager at Gabelli Funds, said, Eli Lilly may still have two years of good growth, but I just think they're gonna hit a wall at some point sooner rather than later.
Holz from Mizuho also believes that the current market rotation - traders are withdrawing from large enterprises that have performed well throughout the year - is another important reason for the decline in Eli Lilly's stock price.
Eli Lilly's market value has now fallen below 800 billion US dollars, but it has still risen by about 41% so far this year.
Holz believed that If the stock price remains at the current lower level, then after the second quarter financial report, which is scheduled to be released on August 8, its stock price may rebound.
If all of the signs point to a very strong fundamental picture, then I think the stock will recover.