By Bhanvi Satija and Amruta Khandekar
Retail flows into Eli Lilly spiked to a more than two-year high in November, as small investors rushed to buy the stock after the U.S. pharma major received a highly anticipated approval for its weight-loss drug Zepbound. Daily net purchases surged to $14.4 million on Nov. 8, when Zepbound was cleared in the U.S. and the U.K., hitting their highest levels since January 2021, as per data from Vanda Research.
Lilly and Novo Nordisk - seen as leaders in a potential $100 billion obesity treatment market - have helped rekindle retail investor interest in the healthcare sector.
"During the COVID period, retail investors were piling into healthcare because of the vaccines and after that there was a bit of a hangover of purchases. But now with these (weight-loss) drugs, some of it is returning," said Marco Iachini, senior vice president of research at Vanda Research.
Retail investors are now "catching up" with institutional investors, said Sel Hardy, vice president of equity research at CFRA.
"(Eli Lilly) is almost becoming a household name. A lot of people know about the obesity drug now and the increasing interest and its success," added Hardy.
Heavyweight investors such as JPMorgan Chase and BlackRock had increased their holdings in the stock in the third quarter.
Lilly's shares have climbed 61% year-to-date, trading nearly 50 times their 12-month forward earnings, compared with 27.57 times for the U.S. healthcare sector, according to LSEG data.
Net retail purchases of Novo Nordisk shares hit an all-time high in October, according to Vanda data, after its diabetes drug Ozempic showed early success in a trial to treat kidney failure in diabetes patients.
Novo's American Depository Receipts (ADRs) have risen 47% so far this year.
The surge in interest for the weight-loss drugmakers comes despite a recent decline in overall retail flows to U.S exchanges as the holiday season approaches.
Still, the inflows remain below some of the popular tech stocks like Roblox and AMC, Iachini added.
(Reporting by Bhanvi Satija and Amruta Khandekar in Bengaluru; Editing by Sriraj Kalluvila)