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Investing.com -- Shares of obesity drug makers Eli Lilly and Novo Nordisk have faltered this year despite surging demand for their GLP-1 treatments, as investor concerns about pricing and coverage weigh on the sector.
Novo shares are down more than 40% in 2025 and Lilly is off about 5%, even as their GLP-1 drugs are widely viewed as breakthrough therapies.
BofA said the main drag on sentiment is uncertainty over how much companies will be able to charge for these treatments in the coming years.
Investors are bracing for negotiated pricing under the U.S. Inflation Reduction Act, looming in the near term for Novo’s semaglutide, and the eventual arrival of new competitors after 2028.
At the same time, employer health plans have slowed coverage expansion, reinforcing doubts about how broad reimbursement will be.
Still, the bank argued that fears of steep price erosion are overdone. With the market dominated by Lilly and Novo, and no true generics expected until the early 2030s, the companies should be able to act rationally on pricing.
BofA also said GLP-1s are not as expensive as critics suggest, noting a fresh review from ICER, a nonprofit drug-cost assessor, could soon find the treatments cost-effective, a reversal from its 2022 stance.
Such a shift could push more employers to cover obesity drugs, countering a key overhang on adoption.
BofA maintained a Buy rating on Lilly with a $900 price objective, saying it remains best positioned for growth, even as the sector works through pricing and policy risks that have made 2025 a difficult year for obesity stocks.