Retail investors flock to Eli Lilly after weight-loss drug approval

Retail flows into Eli Lilly hit a more than two-year high in November as small investors rushed to buy the stock after the US pharmaceutical major received a much-anticipated approval for its weight-loss drug Zepbound . Daily net purchases jumped to $14.4 million on November 8, when Zepbound was authorized in the United States and the United Kingdom, reaching their highest levels since January 2021, according to data from Vanda Research.

Lilly and Novo Nordisk – seen as leaders in a potential $100 billion obesity treatment market – have helped revive retail investor interest in the healthcare sector.

“During the COVID period, retail investors rushed into healthcare because of the vaccines and after that there was a bit of a purchasing hangover. But now with these drugs (from weight loss), some of it comes back,” said Marco Iachini. , senior vice president of research at Vanda Research.

Retail investors are now “catching up” to institutional investors, said Sel Hardy, vice president of equity research at CFRA.

“(Eli Lilly) has almost become a household name. A lot of people now know about this obesity drug and its growing interest and success,” Hardy added.

Heavyweight investors such as JPMorgan Chase and BlackRock increased their stakes in the stock in the third quarter.

Lilly shares have soared 61% year-to-date, trading nearly 50 times their 12-month forward earnings, compared with 27.57 times for the U.S. healthcare sector, data shows of the LSEG.

Net retail purchases of Novo Nordisk shares hit a record high in October, according to Vanda data, after its diabetes drug Ozempic saw early success in a trial to treat diabetes. kidney in diabetic patients.

Novo’s American Depository Receipts (ADRs) are up 47% so far this year.

The renewed interest in weight-loss drug makers comes despite a recent decline in overall retail flows to U.S. exchanges heading into the holiday season.

Still, inflows remain lower than some of the popular tech stocks like Roblox and AMC, Iachini added.

(Reporting by Bhanvi Satija and Amruta Khandekar in Bangalore; Editing by Sriraj Kalluvila)