Jim Cramer Bullish on Revolutionary Weight-Loss Drugs, Calls Analysts "Insane"
ICARO Media Group
In a recent episode of CNBC's "Mad Money," TV host Jim Cramer expressed his strong optimism for the future of "revolutionary" weight-loss drugs. Cramer firmly believes that health insurance companies will ultimately cover these drugs and dismisses analysts who preach otherwise as "insane."
Cramer specifically highlighted GLP-1 drugs, which are commonly used to treat diabetes and obesity, and the companies that manufacture them, including Eli Lilly (LLY) and Novo Nordisk (NVO). According to Cramer, it will be more cost-effective for insurance companies to pay for new weight-loss drugs rather than dealing with the long-term consequences of heart disease in their morbidly obese clients.
Cramer's confidence in the sector stems from the potential broader applications of drugs like Ozempic, Wegovy, Mounjaro, and Zepbound, which could eventually be produced in pill form and included in health insurance plans. He predicts that this shift will result in significant valuation gains for pharmaceutical giants Eli Lilly and Novo Nordisk.
The TV host's comments followed Novo Nordisk's announcement of the results from a five-year clinical trial. The trial demonstrated that the use of semaglutide, sold under the brand name Wegovy, reduced the risk of serious cardiovascular complications in patients with obesity issues and heart disease by 20%.
Despite the positive findings, several market analysts remained skeptical of the drugs' overall impact and doubted whether insurance companies would cover them due to their high costs. For instance, the current price of Ozempic stands at approximately $900 for a one-month supply, while Wegovy is listed at $1,349 for the same duration.
Cramer vigorously disagreed with these analysts, arguing that health insurers would be "downright eager to cover" certain groups of patients, such as those with type two diabetes who are at risk of various health issues. He believes insurers should readily pay for drugs that can address these concerns and prevent further complications.
Cramer is not alone in his positive outlook on GLP-1 drugs. Emily Field, head of European Pharmaceutical Research at Barclays, also sees potential in the evolving landscape of weight-loss drugs. Field suggests that there may be a range of therapeutic options available, including oral medications for individuals in the overweight category. She anticipates that coverage for these drugs will expand incrementally as manufacturers provide more data proving their cost-saving benefits.
Following Novo Nordisk's trial results announcement, the company's shares rose by 3% on the next trading day, demonstrating investor confidence in the cardiac benefits of Wegovy. Eli Lilly, a competitor in the weight-loss treatment market and Cramer's preferred drug maker, also experienced a slight increase of 1.17% in share prices.
Refuting the concerns raised by fellow market analysts, Cramer stated, "today's the day when the junk food purveyors, the anti-diabetes devices, and the alcohol stocks were able to run because the analysts said not to fear this new class of drugs. I say: let them run. They're way too knocked down." He envisions the value of Novo Nordisk and Eli Lilly growing considerably as these "miracle drugs" become mass-produced and affordable.
As experts continue to debate the future of weight-loss drugs and insurance coverage, Cramer remains resolute in his belief that insurers will encompass these revolutionary medications in their plans. Only time will tell if his optimism becomes a reality.