From Wall Street Journal:



In the pharmaceutical industry, companies are limited by the size of the healthcare pie, regardless of the effectiveness of their drugs. The need for treatment of various health conditions means that no company can dominate the market indefinitely.

Eli Lilly and Novo Nordisk have seen significant growth in recent years, increasing in value by more than 50% each and collectively reaching a market capitalization of around $1 trillion. This growth has caused the obesity-diabetes companies to diverge from the rest of the industry.

While Eli Lilly and Novo Nordisk have experienced substantial growth, the rest of the pharmaceutical industry has underperformed the market, with the NYSE Arca Pharmaceutical Index rising only 4% compared to the S&P 500’s 24% increase. This indicates a significant divide within the industry.



Read more: A Tale of Two Pharmas: Can Obesity Firms Continue Their Outperformance in 2024?