Wall Street concerns about the impact of GLP-1s on medical device makers returned after glucose monitoring device seller Dexcom ( DXCM ) cut its full-year guidance after missing earnings last week.
However, Dexcom’s woes appear unrelated to the weight loss and diabetes drug disappointment, as rivals such as Abbott ( ABT ) and Medtronic ( MDT ) were not deterred by the lost pressure, again allaying Wall Street’s fears.
The company called the instruction a botched sales tactic.
“We’ve had a very disruptive expansion in the past that has led to significant disruptions, especially at the beginning of the quarter and we’ve seen things improve toward the end,” CEO Kevin Sayer said on the earnings call.
Fears of the expected long-term decline in GLP-1 use have already put pressure on food and beverage stocks. The GLP-1 market is expected to reach $130 billion by 2030, but that has proven to be the case.
Still, medical device stocks have been on a roller-coaster ride in the past year, in part because of Wall Street’s response to data and updates about GLP-1s.
For example, Eli Lilly ( LLA ), the maker of the weight-loss drug Zepbond, announced in June that its GLP-1 formula could help reduce the incidence of sleep apnea. The data showed a bigger decline for people using pressurized breathing masks, known as CPAP machines, but the news still sent CPAP makers stocks lower.
That includes ResMed ( RMD ), the space leader. CEO Mick Farrell told Yahoo Finance that he sees the news as a tailwind rather than a sign of trouble.
“They bring more patients into my hole and we continue to grow,” Farrell said.
Tech companies such as Apple ( AAPL ), Google ( GOOG , GOOGL ), Samsung and Aura Ring offer sleep monitoring software on their devices, further boosting the opportunity. This will bring more awareness about sleep apnea, and therefore more patients.
Inappropriate market
In the past year, Wall Street forecasts based on GLP-1 data have seen several instances of sector doom, but experts say the potential disappointment was largely dampened by supply constraints.
JPM analysts said in 2016 that In an August 2023 note, one company’s revenue in the quarter showed a low-volume bariatric surgery response, saying, “If patients choose not to use GLP-1s for life, which many are unwilling to do, it will likely still shift to bariatric surgery, which remains extremely low.”
The idea of being an underserved market is as true for continuous glucose monitoring devices and CPAP machines as it is for bariatric surgery. And that’s true for GLP-1s as well, as both market leaders strive to increase production capacity.
Wall Street’s jitters haven’t spared the makers of GLP-1 either. Currently, Eli Lilly and Novo Nordisk (NVO) are under threat in several hundred clinical trials for its rival GLP-1s. Among those closely watched are Roche ( RHHBY ), Amgen ( AMGN ), Pfizer ( PFE ), and biotech Viking Therapeutics ( VKTX ).
Roche recently announced positive early-stage trial data, while Viking is starting its late-stage clinical trial — news within a week that sent Eli Lilly’s stock diving. It fell 14 percent in eight days and lost $120 billion in market value. But the same news didn’t drag Novo’s stock that much.
Anjali Kemlani He is a senior health reporter at Yahoo Finance, covering all things pharma, insurance, managed care, digital health, PBMs, and health policy and politics. Follow Anjali on all social media platforms @AnjKhem.
Click here for the latest earnings reports and analysis, earnings whispers and expectations and company earnings news
Read the latest financial and business news from Yahoo Finance