Except for their availability which could prevent Novo Nordisk and Eli Lilly’s explosive sales of their diabetes and weight-loss medications from continuing into the upcoming years.

The worldwide obesity medicine boom has mostly benefited these two corporations, driving up their market values and changing expectations for packaged foods, sugary snacks, and nutritional supplements in addition to the healthcare sector.

Sales of Lilly’s Mounjaro and Wegovy and Ozempic for Novo exceeded forecasts in the most recent quarter, which was released on Thursday. However, both firms noted that they were unable to produce enough product to meet the rapidly increasing demand.

When Lilly’s Mounjaro, which is now only licenced for type 2 diabetes but is increasingly being used “off-label” for weight loss, receives U.S. permission to treat obesity—likely by the end of the year—that squeeze may get worse.

With Wegovy sales hitting $1.36 billion, up 28% from the previous quarter, Danish pharmaceutical manufacturer Novo Nordisk, which surpassed LVMH to become Europe’s most valuable listed business this year, reported record operating profit for the third quarter.

“At this point, the market is supply driven and every vial of (these weight-loss drugs) is getting used,” said BMO analyst Evan Seigerman.

With semaglutide as both Wegovy and Ozempic’s active ingredient, Novo anticipates double-digit sales increase in 2024.

With Mounjaro sales of $1.41 billion, Indianapolis-based Lilly—now valued at $526 billion—became the most valuable healthcare business in the world, breaking the $1 billion mark in a quarter for the first time. By the end of 2023, it wants to double the supply capacity from the previous year.

“With all the investments we’re making and the production plans, the expected demand for (Mounjaro) will be quite significant. So we can be in a tight situation for some time,” said Anat Ashkenazi, Lilly’s chief financial officer, in an interview.

The number of American patients eligible to begin Wegovy medication was restricted by Novo in May. “Compared to 2023, we’ll be supplying significantly more in 2024,” Novo CFO Karsten Munk Knudsen stated in an interview.

The public attention surrounding these medications and their performance has created a buying frenzy for Novo and Lilly shares, which have increased by 47% and 52%, respectively, in 2023.

Both businesses had price-to-earnings ratios that were significantly higher than those of their competitors as of Thursday. Lilly’s P/E stands at a stratospheric 77, while Novo’s is currently at 46.5. Based on LSEG data, the majority of large drugmakers are between 10 and 20.

Novo’s stock increased 3% on Thursday, while Lilly’s saw a 4% increase.

The foremost concern among investors is the timing of the recovery in Wegovy’s supply growth. When will the gates be opened to let in fresh patients?” stated Nicholas Anderson, a manager of Thornburg Investment Management’s portfolio that includes shares of Novo Nordisk.

Because the medications cure problems like diabetes, sleep apnea, and other conditions made worse by being overweight, their success has led investors to sell their shares of healthcare companies that have benefited from the obesity crisis. Numerous food and packaging firms have also expressed concern about the potential impact of the medications on demand.

Last month, Johnson & Johnson said that a large number of obese patients switched to weight-loss medications, which negatively impacted sales of the company’s bariatric surgery devices.

This year, the Invesco Food and Beverage ETF has lost 8.3%, while the iShares Medical Devices exchange-traded fund has lost 12%.

The biggest retailer in the United States, Walmart, stated at the beginning of October that a little decrease in food intake was being caused by the popularity of diet pills.

Analysts have issued a warning, stating that when medications like Wegovy and Mounjaro become more widely accessible in the upcoming months, food companies may suffer.

(Adapted from USNews.com)