The weight-loss industry that fueled one of Wall Street’s most popular ETF themes may finally be going on a crash diet.
ETFs loaded with exposure to obesity-drug titans Eli Lilly And Co (NYSE:LLY) and Novo Nordisk A/S (NYSE:NVO) are tottering after President Donald Trump pledged to reduce the price of top-selling GLP-1 medication such as Ozempic and Zepbound — the same names that drove pharma portfolios to all-time highs. Both stocks are down around 3% on Friday.
• LLY is among today’s weakest performers. See the trading setup here.
Hims & Hers Health Inc (NYSE:HIMS), a company that sells compounded forms of these medications, plummeted more than 15% on Friday, highlighting just how tenuous the GLP-1 universe has grown. Trump’s comments, coupled with Hims & Hers’ own CEO’s stock sale and latest menopause-treatment launch, have investors wondering if the formerly bulletproof “weight-loss economy” can keep its stride going.
ETFs Most Exposed To The GLP-1 Shock
The VanEck Pharmaceutical ETF (NASDAQ:PPH) and the iShares U.S. Healthcare ETF (IYH), both heavily exposed to Lilly and Novo Nordisk, may experience near-term volatility if price reductions pinch margins.
Athough the ETFs are not reflecting the stocks’ declines yet, both of these ETFs prospered as the obesity-drug frenzy pushed valuations to dizzying heights, and the industry faces a reality check if drug profits thin out at a faster rate than patients.
Digital-health–focused funds are also taking a hit. The iShares Healthcare Innovation ETF (NASDAQ:HEAL) and the ROBO Global Healthcare Technology and Innovation ETF (NYSE:HTEC) are down around 1% each, reflecting broader weakness in telemedicine and health-tech names. While neither fund directly holds Hims & Hers, Novo or Lilly, both mirror the sentiment.
On the speculative front, the ARK Genomic Revolution ETF (BATS:ARKG), which is down 3% on Friday, provides exposure to next-generation biotechs developing novel obesity and metabolic therapies, future incumbents to the GLP-1 behemoths.
Weight-Loss Boom Or Bust?
The GLP-1 saga is changing. What started as a simple wager on miracle pills has grown into a multifaceted game of regulation, pricing and public policy. ETF investors who feasted on the obesity-trade profits of 2023–’24 now get to face their first big test: if the sector’s expansion is sustainable when politics go on the prescription pad.
For the moment, the Ozempic trade just became political, and ETF investors might need to begin counting calories in their health care portfolios.
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