The Rise of Weight-Loss Drug Coverage Among US Employers
In a recent Mercer survey, it was revealed that 44% of US employers with 500+ employees now cover weight-loss drugs, up from 41% in 2023. Among employers with over 20,000 employees, a significant 64% offer coverage, compared to 56% the previous year. This coverage extends to GLP-1 drugs like Wegovy from Novo Nordisk and Zepbound from Eli Lilly, which have shown promising results in reducing weight by 15-20%.
The increasing costs of obesity drugs have contributed to a 5% rise in annual healthcare costs per employee, now averaging $16,501 for self-insured plans. This trend indicates a growing interest in the “thin” trade or “vanity” trade, as large firms incentivize employees with benefits to purchase these drugs.
Promoting better health and self-esteem through these benefits could lead to a happier staff and work environment, ultimately resulting in increased productivity. Additionally, the domino effect of a portion of the population becoming thinner may lead to increased interest in injectables, better skincare products, makeup, clothing, gym memberships, and more.
Stock Performance Analysis: Novo Nordisk and Eli Lilly
Both Novo Nordisk and Eli Lilly have seen their stock prices stabilize after a period of decline, prompting investors to consider whether they are a buy at current levels. Eli Lilly recently formed a reversal bottom low on Monday after a gap lower, with today’s price action confirming the reversal. Real Motion indicators show a mean reversion buy signal, with a clearly defined risk level below Monday’s low of 711.40.
Novo Nordisk also experienced a reversal bottom low on Monday, filling the gap left from a previous drop. While Real Motion did not signal a bonafide mean reversion, the Leadership indicator suggests that NVO’s performance is not significantly lagging behind benchmarks. This strong reversal pattern indicates a potential buying opportunity in these stocks, which are viewed as mega-trends in their early stages.
ETF Summary:
– S&P 500 (SPY): 575 support, 600 resistance
– Russell 2000 (IWM): 227 support, 244 resistance
– Dow (DIA): 430 support
– Nasdaq (QQQ): 500 pivotal level
– Regional banks (KRE): 65 pivotal
– Semiconductors (SMH): 235 support, 250 resistance
– Transportation (IYT): Looks promising above 71
– Biotechnology (IBB): 132 support, 138 resistance
– Retail (XRT): 77.00 support, 79 resistance
– iShares iBoxx Hi Yd Cor Bond ETF (HYG): 79.50 pivotal level
In conclusion, the increasing coverage of weight-loss drugs among US employers reflects a growing interest in health and wellness benefits. This trend not only impacts healthcare costs but also has broader implications for consumer behavior and market trends. Investors are closely monitoring the performance of companies like Novo Nordisk and Eli Lilly, which could present attractive opportunities for those looking to capitalize on emerging mega-trends in the market.