Diabetes is a significant problem in the United States. According to the Centers for Disease Control and Prevention (CDC), more than 34 million Americans have diabetes, and 20% of them are unaware of their condition. The CDC estimates that 88 million people in the United States are in the prediabetes stage.
There is no cure for diabetes, although it can be managed with medication. Consequently, diabetes drugs will never disappear. There is, in fact, always an opportunity for improvement in their research and development. One hundred fifty-eight medicines are currently available for the treatment of diabetes. Pharmaceutical corporations continue to devote time and money to the development of 'better' treatments despite the vast number of available medications.
In compiling our list of the best stocks to purchase for diabetes, we studied the largest publicly traded diabetic firms that manufacture medications, insulin pumps, and other medical devices such as continuous glucose monitoring systems. Without further ado, let's take a look at the 12 greatest stocks to buy presently in the diabetes industry.
Basic understanding of diabetes
Here is a brief overview of one of the most prevalent diseases in the United States: diabetes. There are two major forms of diabetes, types 1 and 2, although the underlying concept is identical. Due to how the body processes the sugar in the blood, both types 1 and 2 of diabetes are chronic illnesses. In order to provide the body with energy, sugar from food must enter the cells via insulin. Without insulin, blood sugar levels will be extremely high, which is a condition that destroys blood vessels. When important organs, such as the heart, eye, and kidney, do not receive adequate blood flow, it can lead to disorders throughout the body. Consequently, it is essential to treat diabetes with medication. High blood sugar is not synonymous with being "hyper" or experiencing a "sugar rush." Uncontrolled diabetes has bitter consequences.
The primary distinction between type 1 and type 2 diabetes is the underlying cause of the inability to metabolize sugar. In the pancreas, a type of cell known as beta-cell generates insulin. In type 1 diabetes, the pancreas is incapable of producing insulin due to the destruction of beta cells by an autoimmune reaction. Insulin is prescribed to the patient as a treatment. In type 2 diabetes, either the cells do not respond to insulin as effectively as they once did, or the beta cells do not produce enough insulin. Depending on the patient, type 2 diabetics can be treated with non-insulin medications, insulin, or both.
Diabetes affects 422 million people globally, resulting in around 1.6 million annual fatalities. The frightening aspect is that these numbers will only increase with time.
Diabetes Market Snapshot
Due to the nature of the disease, the diabetes industry was one of the MedTech sectors that remained stable during the pandemic-driven commotion. Diabetes management is vital for averting any health emergency.
Because of the broad lockdown limitations, diabetics' physical activities and diets (due to limited food sources) went out the window. In addition, inadequate access to anti-diabetic medications was a cause for worry during the pandemic. Consequently, the demand for diabetes treatment products skyrocketed during the COVID-19 pandemic.
According to the National Diabetes Statistics Report 2020 from the Centers for Disease Control and Prevention, 34,2 million Americans have diabetes, while 88 million adults have prediabetes. Nearly 30 million Americans suffer from diabetes, a condition in which the body is unable to digest sugar effectively. This sugar buildup in the bloodstream and body can develop into a number of further major health issues, such as cardiovascular disease, renal disease, and eye damage if left unchecked. As this is an area where treatment cannot be postponed, the place has enormous promise. Investing in companies engaged in diabetes management appears prudent at this time.
With the progressive reopening of the economy and the growth of the diabetic population, companies that provide diabetes care are continuously taking measures to meet the increased needs of their customers. Insulet Corporation PODD, which debuted the Omnipod DASH Insulin Management System (Omnipod DASH System) in Canada in January of this year, is a prominent firm in this regard. During its fourth-quarter 2020 earnings call in February, the company also stated that its revenues increased year-over-year due to Omnipod's robust global adoption. In comparison to the sector, the company's share price has increased by 80 percent over the past year.
1. Abbott Laboratories (ABT)
ABT is a multinational pharmaceutical corporation that conducts research & development, manufactures, and sells drugs and other health goods. Tandem Diabetes Care and the company have worked to create and market integrated diabetes treatments. In contrast to the Established Pharmaceutical Products category, which provides drugs for the treatment of various ailments, the Diagnostic Products segment provides laboratory systems.
ABT released FreeStyle Libre® 2 and gained CE Mark for FreeStyle Libre 3, which automatically provides up-to-the-minute glucose readings in its third fiscal quarter. Yesterday, the firm announced that FreeStyle Libre® 2 had been approved by Health Canada for adults and children with diabetes who are four years old or older. Additionally, ABT pledged $5 million over three years to the American Diabetes Association in November (ADA).
During the company's fiscal third-quarter ending September 2020, sales increased 9.6 percent year-over-year to $8.9 billion, driven by growth in its diabetes sector. The sales of ABT's medical devices in the Diabetes Care category increased by 26.9 percent annually. The company's earnings per share increased by 30.2% year-over-year to $0.69.
For the fourth-quarter ending in December 2020, analysts anticipate revenue of $10 billion, reflecting a 19.8 percent growth year-over-year. Meanwhile, EPS is anticipated to increase 42,1% to $1.35.
2. Virta Health
The startup based in San Francisco has a great and audacious goal: to reverse type 2 diabetes in 100 million people by 2025. It attempts to accomplish so safely, sustainably, and without medication or surgery side effects or hazards.
The Virta Treatment promises to reduce blood sugar levels, lessen the need for diabetes medication, and promote weight loss through nutritional ketosis, which entails consuming more fat than carbohydrates as the body's primary source of energy. The organization provides nutritional counseling, physician supervision, and biomarker monitoring for a successful journey to reverse diabetes.
3. Nemaura
The UK-based biotechnology firm intends to deliver both new and old drugs to patients using enhanced formulations and delivery technologies. Regarding diabetes care, it provides an innovative non-invasive option with its SugarBEAT CGM, which is essentially a skin patch with unique capabilities.
Using the adhesive skin patch, the system comfortably extracts a little amount of glucose from the interstitial fluid. However, WebMD reported that SugarBEAT was not as accurate as CGM devices from Dexcom and other companies based on early study data. Nemaura aims to submit the gadget to the FDA this year, so we will soon learn what the regulatory agency has to say.
4. Johnson & Johnson (NYSE: JNJ)
Johnson & Johnson, with a market capitalization of nearly $370 billion, is the group's titan. J&J's diabetes care unit is expected to produce approximately $1.6 billion in sales in 2017, yet this represents only a fraction of the company's total revenue. However, J&J's pharmaceutical sector markets the diabetes medicine Invokana, which is expected to contribute approximately $1.1 billion to the company's total diabetes-related revenue this year.
There is, however, a caveat about Johnson & Johnson. J&J might not have been classified as a diabetes stock for much longer if not for Invokana. The company announced its withdrawal from the insulin pump market. J&J is also investigating potential alternatives for its additional diabetes care businesses. These alternatives include the sale of units and the formation of partnerships or joint ventures with other companies.
Nevertheless, J&J now qualifies as a diabetes stock. And it should be a strong stock to purchase in the long run, but due to its pharmaceutical portfolio rather than its diabetes care items. The combined sales of the cancer drugs Darzalex and Imbruvica and the autoimmunity treatment Stelara are increasing rapidly. This year's acquisition of the Swiss pharmaceutical company Actelion brought a successful pulmonary hypertension franchise to the business's lineup. J&J has one of the most promising medication pipelines in the biopharmaceutical sector, including prostate cancer medicine apalutamide.
5. Novo Nordisk A/S (NVO)
NVO is a global leader in the discovery, development, manufacturing, and marketing of pharmaceuticals. Diabetes and Obesity care and Biopharmaceuticals are the two primary industries in which it operates. The company has a deal with Evotec AG to explore small-molecule treatments for diabetes, obesity, and co-morbidities.
NVO announced the acquisition of Emisphere Technologies for $1.8 billion in November 2020. Emisphere specializes in drug delivery technology that turns injectable medicines into oral medicines. NVO currently applies its Eligen SNAC technology to the oral formulation of Rybelsus, its type-II diabetes medication.
During the nine months ending September 2020, NVO's revenue increased 6 percent year-over-year to 94.8 DKK, driven by North America Operations. The substantial rise of its GLP-1 class drugs, Ozempic® and Rybelsus®, drove a six percent increase in diabetes and obesity care sales. The earnings per share of NVO for the quarter increased to 14 DKK from 12.68 DKK in the same period last year.
The consensus sales forecast for the fourth quarter ending December 2020 is $5.4 billion, representing a 3% increase compared to last year's same period. EPS is anticipated to increase at a rate of 1.8% per year over the next five years. NVO climbed 16.6 percent year-to-date to conclude yesterday's trading session at $68.14. During the past six months, the stock price increased by 2.8%.
6. DexCom Inc (DEXCOM)
Since 1999, the diabetes management powerhouse headquartered in San Diego has been developing continuous glucose sensing technology. Initially, the business concentrated on developing an implantable sensor that would not be rejected by the body and would function for a prolonged duration.
The FDA approved its most recent system, the Dexcom G6, which does not require finger pricks for blood draws, in March 2018. Like other continuous glucose monitoring systems, it enables diabetics to view their blood sugar levels throughout the day and night using a sensor that is implanted under the skin. The business has recently collaborated with Apple to enable the Apple Watch to connect to the CGM sensor.
According to the firm, the DexCom devices' high degree of comfort and technical equipment has contributed to their success in recruiting new patients. The gadgets have interchangeable sensors that provide consistent revenue for the business. The 2021 findings released by DexCom were quite promising and contributed to a substantial increase in the stock price.
7. Medtronic (NYSE:MDT)
It was not always the case that Medtronic was the largest medical technology company in the world, with over 260 sites in 155 countries. It was formed in 1949 as a single repair business for medical equipment. Over the years, they have created cardiac pacemakers, implantable mechanical devices, drug and biological delivery systems, as well as powered and sophisticated energy surgical instruments, allowing them to treat approximately 40 medical problems.
With its most recent hybrid closed-loop system, Medtronic appears to be one step closer to developing its own artificial pancreas. The company has been assisting people for over 25 years. Its MiniMed 670G system, the first hybrid closed-loop system, continuously monitors blood sugar levels and automatically distributes insulin, but users must still manually enter the bolus insulin dose (the type of insulin often administered during meals) according to what they consume.
8. Eli Lilly and Company (LLY )
LLY is a pharmaceutical firm of international renown that produces endocrinology medications for the treatment of diabetes and osteoporosis in postmenopausal women and men. In addition, it has created a treatment for human growth hormone insufficiency and pediatric developmental disorders. Additionally, LLY has partnered with Junshi Biosciences to co-develop therapeutic antibodies for the potential treatment and prevention of COVID-19.
LLY will market an insulin pump named mylifeTM YpsoPump®, which was created and manufactured by Swiss diabetes specialist Ypsomed. The arrangement was announced on November 18, 2020. This pump would also utilize pre-filled insulin cartridges for rapid-acting insulins manufactured by LLY.
LLY's revenue for the third quarter ending September 2020 increased by 4.8% year-over-year to $5.7 billion. Meanwhile, the company's EPS decreased by 2.9% year-over-year to $1.33 due to $125 million in expenses expended for the research of prospective COVID-19 treatments. LLY added the Insulin Value Program to its entire array of insulin affordability solutions for diabetes patients in the United States during the quarter.
The market anticipates that revenue for the fourth-quarter ending in December 2020 will increase by 7.8 percent year-over-year to $6.6 billion. Analysts see an 18.5 percent growth in EPS to $2.05.
9. Tandem Diabetes Care Inc（TNDM）
Insulin pumps are the most well-known product manufactured by Tandem Diabetes, a medical technology business that produces a number of items for people with insulin-dependent diabetes. Tandem Diabetes also provides a web-based tool for data management that enables the visual presentation of all pertinent patient and healthcare provider data. In addition, the company is now developing an insulin delivery system, among other things. Tandem, like DexCom, is headquartered in San Diego, California, and Tandem collaborates with DexCom on product development and sales.
10. Insulet (NASDAQ:PODD)
Insulet Corporation, founded in 2000 and located in Bedford, Massachusetts, develops, manufactures, and markets an insulin infusion system for insulin-dependent diabetes people primarily in the United States, Canada, and Europe.
The company offers the OmniPod Insulin Management System, which consists of a disposable insulin infusion device and a personal wireless diabetes manager; it provides a novel alternative to conventional insulin delivery methods. The Pod's simple, wearable design allows for up to three days of continuous insulin delivery.
11. Sanofi （SAN）
French pharmaceutical business Sanofi is a well-known participant in the European diabetes medicine industry, and the corporation owns a variety of globally utilized items. In recent years, Sanofi has faced rising generic competition, which is reflected in the company's sales results. The stock price has been stagnant for a number of years and has not yet surpassed its 2015 highs. However, the corporation is a steady dividend payer. The dividend has steadily climbed over the previous decade, and the current dividend yield is approximately 3.7%.
12. Diabeloop
The French firm was created in 2015, and its declared purpose is to make available disruptive technology advancements that would enable people with type 1 diabetes to live the life of their choosing. Diabeloop creates innovative technical technologies for the automation of diabetes treatment.
The (very new) company developed a hybrid closed-loop system, a Bluetooth-enabled external medical gadget that detects glucose levels every five minutes. The algorithm then analyzes data in real-time and considers the patient's physiology, history, and data entries (meals or activity) to decide the appropriate insulin dose to dispense.
Final words
Diabetes remains one of the world's most rapidly expanding chronic diseases. Diabetes remains one of humanity's greatest challenges. Diabetes treatment is costly, costing the United States $322 billion annually. Naturally, a market of this size has attracted a multitude of companies specializing in the disease condition. I believe that the previously mentioned stocks are all viable options for investors.
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