Tema Pharmaceuticals and Investments (US stock code: HRTS), an ETF that tracks many pharmaceutical companies focused on the diet drug circuit, can be described as a very good choice. Industry ETF portfolios are diversified, and the volatility is often far less than individual stocks.
Currently, the world's two major manufacturers of “weight loss drugs” — Danish pharmaceutical giant NVO.US (NVO.US) and America's LLY.US (LLY.US), compete extremely fiercely in the field of diet pills. The extremely strong demand trend of Zepbound, a diet drug launched by Eli Lilly, and Wegovy, launched by Novo Nordisk, can be described as the core driving force for the two major keywords “GLP-1” and “weight loss magic drug” to frequently make international news headlines.
As the supply of the two major diet drug products, Zepbound and Wegovy, is far from keeping up with the huge global demand, the stock prices of these two companies have repeatedly reached new highs in the secondary market. Lilly's stock price has risen by more than 32% in the US stock market since 2024, helping Lilly's total market value rise to the top ten positions of the world's listed companies; Novo Nordisk ADR rose more than 26% in the US stock market during the same period. Currently, both are hovering near historical highs, and may take a U-turn downward at any time.
In the US stock market, this ETF that only tracks “diet drug bulls” is worth watching
For stock investors who have not caught up with the “Nolly bull market”, are unwilling to withstand high volatility and chase individual stocks at historic highs, but expect to invest in the diet medicine circuit, Tema Pharmaceuticals and Investments (HRTS: HRTS), an ETF that tracks many pharmaceutical companies focused on the diet drug circuit, can be described as a very good choice. Industry ETF portfolios are diversified, and the volatility is often far less than individual stocks.
HRTS is an ETF tracking target that includes Novo Nordisk and Eli Lilly. More notably, according to S&P Global Market Intelligence and MarketSurge data, nine of the shares held by HRTS have generally surpassed the S&P 500 index and Eli Lilly and Novo Nordisk. This includes stocks such as Viking Therapeutics (VKTX.US), Keros Therapeutics (KROS.US), and Mineralys Therapeutics (MLYS.US).
The HRTS ETF can be described as the first ETF in the US stock market that hopes to obtain high profits from the boom and growth expectations of diet pills and related fields. The ETF tracks many pharmaceutical companies focused on the diet drug circuit, including large-scale pharmaceutical giants such as Novartis, Nord, and Eli Lilly, as well as fresh blood from those in the start-up stage around the world with full revenue potential and focus on developing diet drugs.
“We have seen a forecast report from the J.P. Morgan Chase research team that shows that by 2030, the GLP-1 market will exceed $100 billion, and the scale of GLP-1 usage among diabetic and obese people will drive this market to become even larger,” said Todd Rosenbluth (Todd Rosenbluth), an analyst at Vetta Fi. “It is estimated that by 2030, the total number of GLP-1 users in the US may reach 30 million, accounting for about 9% of the total population.”
Wall Street firm Morgan Stanley expects Zepbound's sales to reach $2.2 billion by 2024. The drug was officially approved by the FDA in November 2023. Meanwhile, Bank of America analysts predicted in a November report that Zepbound's total sales in 2024 would reach approximately $2.7 billion.
A Goldman Sachs forecast report shows that by 2030, the annual sales of the global anti-obesity drug market may grow to around 100 billion US dollars, while the annual sales volume in early 2023 was only 6 billion US dollars. Goldman Sachs's forecast is based on about 15 million American adults receiving anti-obesity medication for chronic weight loss management in 2030, while the US will have about 105 million medically obese or overweight adults. Analysts excluded people with diabetes from predicting obesity. The World Obesity Federation (WOF) estimates that by 2035, more than 4 billion people (more than half of the world's population) may have varying degrees of obesity.
Using ETFs to realize return on investment from the global boom in demand for diet pills
As mentioned above, the HRTS ETF tracks many pharmaceutical companies focused on the diet drug circuit. This ETF holds shares of more than 40 pharmaceutical companies closely related to the diet pill theme.
Unsurprisingly, Novo Nordisk (Novo Nordisk) and Eli Lilly (Eli Lilly) had the highest share of positions in this ETF, accounting for 5.3% and 5.1%, respectively, but only slightly more than 10% of the total positions. Fresh blood focused on developing diet pills also accounts for a significant proportion.
The ETF's broader investment portfolio has attracted many retail investors. These investors are generally worried that in such an emerging market, they are betting too much on just a few companies such as Novo Nordisk and Eli Lilly, and that they may miss the huge increase after “new weight loss drug forces” such as Viking Therapeutics released major diet drug research and development results.
According to the data, Viking Therapeutics is the ETF's best performing holdings this year. The company's stock price soared 252% during the year as the company's drugs are likely to be more effective in the future than competitors' weight loss products such as Nordisk and Eli Lilly. There have also been speculations that the company may be bought by pharmaceutical giants. The San Diego-based company is valued at just $6.9 billion. Eli Lilly's stock price, on the other hand, has soared by nearly 130% over the past five years, with a market capitalization of over $700 billion.
At the end of February, Viking Therapeutics announced positive results from a phase II trial of its weight loss drug VK2735, which met all primary and secondary endpoints, showing a statistically significant reduction in body weight at all doses compared to placebo. Patients receiving weekly doses of medication lost 14.7% of their body weight from baseline after 13 weeks. In terms of efficacy data, the phase II results revealed by VK2735 this time were even slightly higher than the clinical trial data for Eli Lilly's equivalent mechanism drugs and Novo Nordesmeglutide.
HRTS is an ETF that covers a wide range of areas and is currently very small. This ETF was launched in November 2023, and the current total size is only about 52 million US dollars. Other top performing ETF holdings, HRTS, include Keros Therapeutics and Mineralys Therapeutics, which have increased 60% and 58%, respectively, this year. Keros is also testing protein-based therapies, while Mineralys is investigating novel treatments for complications in the area of obesity, such as high blood pressure.
In the future, there may be more and more ETFs focusing on the diet drug circuit. HRTS issuer Tema's rivals in the ETF field, Amplify and Roundhill are also planning to launch their own “diet drug-themed ETF.” Rosenblus, an analyst from Vetta Fi, predicts that the diet drug ETFs that both companies are focusing on may choose to launch in the second quarter. “Among them, the version of Roundhill is considered more focused than HRTS and probably owns a few companies.”
“Themed ETFs generally help provide investors with diversified portfolios and are far less volatile than individual stocks, as individual companies may face challenges in achieving long-term goals, while others may find it difficult to find a time to buy individual stocks because the stock price is too expensive or too highly valued. Furthermore, this long-term investment trend is likely to help many startups grow, not just current industry leaders.” Rosenblues said.