The share prices of Eli Lilly and Novo Nordisk, leading stocks in obesity treatment, have been fluctuating, resulting in poor performance for the exchange-traded funds (ETFs) that heavily incorporated these stocks.
According to the financial investment industry on the 24th, the KODEX Global Obesity Treatment TOP2 Plus has seen a 19.45% drop in share price over the past six months. During the same period, the share price drops for TIGER Global Obesity Treatment TOP2 Plus and RISE Global Obesity Industry TOP2+ were 17.51% and 13.42%, respectively.
All three ETFs gained attention as their share prices surged by over 20% from February last year until July. With Eli Lilly and Novo Nordisk accounting for over 50%, the rise in these stocks boosted the ETFs. The Korea Exchange took steps to impose additional limits on the weight of individual stocks within the ETFs, citing concerns over excessive concentration in a small number of stocks.
This concentration later turned into a burden. Since July of last year, the share prices of Eli Lilly and Novo Nordisk have been on a downward trend, causing all three ETFs to follow a downward curve. The revenue rates for Eli Lilly and Novo Nordisk over the past six months are -12.72% and -39.15%, respectively.
The proportion of investors experiencing losses has also increased. The average revenue rate for 1,836 investors in the KODEX Global Obesity Treatment TOP2 Plus linked with Naver Pay's My Assets service is currently -13.31%. Investors in TIGER Global Obesity Treatment TOP2 Plus and RISE Global Obesity Industry TOP2+ are also recording average loss rates around 10%. Nearly 80% of investors in all three ETFs are now facing losses.
In particular, the market capitalization of RISE Global Obesity Industry TOP2+ has shrunk from over 10 billion won to 5.7 billion won. According to the Korea Exchange listing regulations, if the market capitalization remains below 5 billion won for more than one month after a year of ETF establishment, it becomes subject to delisting.
The fate of the three ETFs hinges on the share prices of Eli Lilly and Novo Nordisk. As competition in the glucagon-like peptide-1 (GLP-1) obesity treatment market intensifies, research and development outcomes are expected to be crucial.
David Ricks, Chief Executive Officer (CEO) of Eli Lilly, stated that he would present the results of Phase 3 clinical trials for its obesity treatment, which is also under development as an oral medication, in the second quarter of this year at the 43rd JP Morgan Healthcare Conference held recently in San Francisco.