Diabetes is one of the most widespread diseases. Hundreds of millions of people worldwide suffer from diabetes. In addition to hereditary factors, obesity and lack of exercise are also common causes of the disease. Fortunately, diabetes can be detected early and is now well treated, so that harmful consequences can be avoided or alleviated in the long term. In addition to the right diet and sufficient exercise, drug treatment is also necessary in many cases. Companies that offer drugs, treatment methods and measuring devices have usually been a good choice for investors in recent years. In this article, we present a small selection of diabetes stocks in more detail.
WHAT IS DIABETES?
Diabetes is a metabolic disease that causes an elevated blood sugar level. This increased blood sugar occurs because the production or use of insulin, a hormone produced by the pancreas, is disrupted. Insulin helps the body to use blood sugar in the cells to produce or store energy. There are two main types of diabetes: type 1 diabetes and type 2 diabetes.
Type 1 diabetes
Type 1 diabetes occurs when the body's immune system destroys the insulin-producing cells of the pancreas. As a result, the body produces little or no insulin. Type 1 diabetes is usually diagnosed in childhood or adolescence, but can also occur in adulthood. The exact causes are not known, but it is assumed that genetic and environmental factors play a role. Treatment usually consists of insulin injections or an insulin pump to meet the body's insulin requirements.
Type 2 diabetes
Type 2 diabetes is the most common form of diabetes and occurs when the body either does not produce enough insulin or the cells become resistant to the effects of insulin. Type 2 diabetes often develops in adulthood and is often associated with obesity, poor diet and lack of exercise. Treatment may involve a combination of dietary changes, weight reduction, physical activity and oral medication or insulin injections.
A third type is gestational diabetes, which occurs in some women during pregnancy and usually disappears after childbirth. Untreated diabetes can lead to various complications, such as cardiovascular disease, kidney damage, eye damage, nerve damage and poor wound healing.
HOW IS DIABETES TREATED?
The specific treatment method depends on the type of diabetes and aims to keep the blood glucose level within the target range in order to minimize the risk of complications.
Treatment of type 1 diabetes
As the body produces no or very little insulin in type 1 diabetes, the main treatment is insulin therapy. Patients must inject insulin daily or use an insulin pump to cover their insulin requirements. The insulin dose is adjusted individually and can vary depending on the meal, physical activity and blood sugar level.
Treatment of type 2 diabetes
The treatment of type 2 diabetes often starts with lifestyle changes. A balanced and healthy diet is crucial for blood sugar control. Diabetics are advised to focus on whole grains, fruits, vegetables, lean protein and healthy fats, and limit their intake of sugary and highly processed foods.
Being overweight can also increase insulin resistance, so losing weight is an important step in improving blood sugar control in overweight diabetics. Regular exercise also helps to lower blood glucose levels by increasing the insulin sensitivity of cells. If these measures are not sufficient to keep blood sugar levels within the target range, oral medication or insulin injections may be necessary.
Treatment of gestational diabetes
The treatment of gestational diabetes focuses on dietary changes and physical activity. In some cases, insulin may also be necessary to control blood sugar levels during pregnancy. In addition to blood sugar control, blood pressure and cholesterol levels are usually monitored.
OVERVIEW OF THE DIABETES INDUSTRY
The diabetes industry is an important part of the healthcare sector and deals with the research, diagnosis, treatment and prevention of diabetes. The industry comprises various players such as pharmaceutical companies, medical technology manufacturers, diagnostics companies, research institutes, medical specialists and diabetes organizations.
As the number of diabetes cases has been increasing worldwide for many years, the industry is experiencing steady growth. In order to meet the needs of affected patients, innovative solutions have been developed in recent years to improve the quality of life and medical care of diabetics.
Diagnosis
The diagnosis of diabetes is a critical step in ensuring the right treatment and care for those affected. Companies in this field offer various blood glucose tests such as fasting plasma glucose tests, oral glucose tolerance tests or HbA1c tests, which indicate the average blood glucose level over the last 2-3 months. In addition, various companies develop and market advanced diagnostic devices and test kits for use in clinics and for self-monitoring at home.
Treatment
The treatment of diabetes involves a combination of drug therapy, lifestyle changes and regular self-monitoring of blood glucose. Pharmaceutical companies and biotechnology companies develop and produce drugs such as insulin analogs, oral antidiabetics, GLP-1 agonists and SGLT2 inhibitors.
In addition, medical technology manufacturers offer innovative solutions for insulin delivery, such as insulin pumps and automated insulin dosing systems, which improve the quality of life of diabetics.
Technology
Technology is playing an increasingly important role in the diabetes industry and offers innovative solutions for diagnosis, treatment and self-management. These include continuous glucose monitoring (CGM) systems, insulin pumps and artificial pancreas systems that automate insulin delivery. In addition, companies are developing digital health platforms and apps for mobile devices that leverage the benefits of technology to enable diabetics to better self-manage and receive close care from healthcare professionals.
Sales and growth forecasts for the diabetes industry
The diabetes industry is a fast-growing market due to the increasing prevalence of diabetes and continuous innovation in diagnostics, therapy and technology. Experts predict that the global market for diabetes products and services will continue to record solid growth in the coming years. Factors such as the ageing population, the increase in obesity and physical inactivity as well as the growing demand for improved therapy options and self-management solutions are driving sales growth in the industry. In particular, the segments of continuous glucose monitoring, insulin pumps and digital health platforms have great potential for above-average growth.
THE LARGEST AND BEST-KNOWN DIABETES SHARES AT A GLANCE
Among the leading companies active in the diabetes industry are some of the world's leading healthcare groups, where the sector accounts for only a small proportion of total sales, as well as companies that focus (almost) exclusively on diabetes and related diseases. In the table below you will find a selection of diabetes stocks, followed by a brief introduction to some of the companies.
Top 10 diabetes stocks, sorted by market capitalization
| Company | Symbol | Country | Market capitalization |
| Johnson & Johnson | JNJ | USA | USD 507.57 billion |
| Novo Nordisk A/S | NOVO.B | Denmark | USD 383.95 billion |
| Eli Lilly and Company | LLY | USA | 365.08 billion USD |
| Roche Holding Ltd. | ROG | Switzerland | USD 255.51 billion |
| Pfizer Inc | PFE | USA | USD 226.96 billion |
| Novartis AG | NOVN | Switzerland | USD 214.2 billion |
| Abbott Laboratories | ABT | USA | USD 194.06 billion |
| Sanofi SA | SAN | France | 142.45 billion USD |
| DexCom Inc | DXCM | USA | 48 billion USD |
| Tandem Diabetes Care Inc | TNDM | USA | USD 2.42 billion |
NOVO NORDISK
- Company: Novo Nordisk A/S
- Symbol (TWS):NOVO.B
- ISIN: DK0060534915
- Stock Exchange: Copenhagen Stock Exchange
- Country: Denmark
- Currency: Danish krone (DKK)
- Market capitalization: DKK 2593 billion / USD 48 billion
- Sales (TTM) in USD: 26.18 billion
Novo Nordisk is one of the world's leading and best-known pharmaceutical companies in the diabetes industry. Novo Nordisk is committed to improving the quality and duration of life for people with chronic diseases through advanced research and technology. The company offers a comprehensive portfolio of insulin products, glucagon-like peptide-1 (GLP-1) agonists, oral antidiabetics and supportive therapies for the treatment of diabetes and other metabolic diseases.
In addition to its focus on diabetes and obesity, Novo Nordisk is also engaged in research and development of therapies for rare blood disorders such as hemophilia and growth disorders. Headquartered in Bagsværd, Denmark, Novo Nordisk has manufacturing facilities in seven countries and employs more than 45,000 people in over 80 countries. The company's shares are listed on the NASDAQ OMX Copenhagen and are among the leading pharmaceutical companies in the global healthcare sector.
Brief analysis & outlook
Novo Nordisk has recently benefited from strong sales of its drug Semaglutide, which is used to treat both diabetes and weight loss. The future of the company also looks promising, but due to the very strong share price performance in recent years, the share is already comparatively highly valued and therefore harbors some risks for investors. Novo Nordisk is continuing its research on Semaglutide and is investigating in a phase 3 study whether the drug can also be used in Alzheimer's disease and non-alcoholic steatohepatitis (NASH). In addition, Novo Nordisk has several projects in the pipeline, some of which are expected to come to market in the next few years.
DEXCOM
- Company: DexCom Inc
- Symbol (TWS):DXCM
- ISIN: US2521311074
- Stock exchange: Nasdaq
- Country: USA
- Currency: US Dollar
- Market capitalization: USD 48 billion
- Turnover (TTM) in USD: 2.91 billion
The American company DexCom, headquartered in San Diego, California, is a manufacturer of continuous glucose monitoring systems that help in the treatment of diabetes. The so-called CGM devices (CGM stands for Continuous Glucose Monitoring) from DexCom make the constant pricking of the finger to measure blood glucose levels superfluous. They can simply be worn on the stomach, lower back or upper arm and display the values on the smartphone. The DexCom devices are characterized by their high wearing comfort and technical features, which, according to the company, has helped to attract new patients. The devices include interchangeable sensors, which generate continuous sales for the company.
Brief analysis & outlook
After a price rally in the second half of last year, the DexCom share underwent a sideways consolidation in the first months of 2023. The share is currently attempting to break through the technical resistance in the USD 120-125 range, which would confirm the upward trend and create new upside potential. The important 50-day and 200-day lines also signal an upward trend. The next quarterly results will be published at the end of April and could provide the next impetus. The last two quarterly results were followed by strong upward movements of around 10 % and 20 % respectively.
TANDEM DIABETES
- Company: Tandem Diabetes Care Inc
- Symbol (TWS): TNDM
- ISIN: US8753722037
- Stock exchange: Nasdaq
- Country: USA
- Currency: US Dollar
- Market capitalization: USD 2.42 billion
- Turnover (TTM) in USD: USD 0.8 billion
Tandem Diabetes is a medical device company that manufactures various products for people with insulin-dependent diabetes and is particularly known for its insulin pumps. In addition, Tandem Diabetes offers a web-based data management application that enables the visual display of all relevant data for patients and healthcare providers. In addition, the company is currently developing an insulin delivery system, among other products. Like DexCom, the company featured above, Tandem is headquartered in San Diego, California, and Tandem collaborates with DexCom on development and sales.
Brief analysis & outlook
While many diabetes stocks are in solid upward trends, the Tandem Diabets share is trading at a multi-year low. As recently as December 2021, the chart picture looked very optimistic before a downward trend followed, leading to a loss in value of around 75%. Although Tandem Diabetes' turnover increased in the last financial year, growth slowed. In addition, the company has posted losses in the last four quarters, followed by a number of downgrades from analysts. For growth companies that are not yet profitable, it is not unusual for a constant upward trend to develop only when the company achieves sustained and continuous profits. If this is achieved over the next few quarters, above-average share price returns could follow. Until then, however, an investment remains associated with high risks.
SANOFI
- Company: Sanofi
- Symbol (TWS): SAN
- ISIN: FR0000120578
- Stock Exchange: Paris Stock Exchange
- Country: France
- Currency: Euro
- Market capitalization: EUR 129.6 billion / USD 142.38 billion
- Turnover (TTM) in USD: 50.08 billion.
The French pharmaceutical company Sanofi is a well-known player on the market for diabetes medication from Europe. The company has numerous products that are used worldwide. In recent years, Sanofi has increasingly had to contend with generic competition, which is also reflected in its sales figures. Sanofi is also regarded as a reliable dividend payer. The dividend yield is currently 3.4 % with a payout ratio of slightly less than 50 %.
Brief analysis & outlook
After Sanofi shares recorded only moderate price gains at the beginning of 2023, a price rally with high momentum followed at the end of March and in April. The share is currently trading at over 100 euros, close to last year's highs. Despite the fall in the price of its most widely prescribed insulin product Lantus, Sanofi has promising plans for the future. These include the acquisition of Provention Bio, a biotech company focused on the development of drugs to delay or prevent autoimmune diseases such as type 1a diabetes. In addition, further products are in the pipeline and Sanofi expects new and extended approvals on a regular basis.
ELI LILLY
- Company: Eli Lilly and Company
- Symbol (TWS): LLY
- ISIN: US5324571083
- Stock Exchange: New York Stock Exchange
- Country: USA
- Currency: US Dollar
- Market capitalization: USD 365.08 billion
- Turnover (TTM) in USD: 28.54 billion
Eli Lilly is a leading global pharmaceutical company headquartered in Indianapolis, Indiana, USA. Founded in 1876 by Colonel Eli Lilly, the company is dedicated to researching and developing innovative medicines to improve patients' lives and overcome medical challenges. In addition to activities in the fields of oncology, immunology, neuroscience, cardiovascular and metabolic diseases, Eli Lilly focuses on the treatment of diabetes. The company offers leading drugs such as Humalog (insulin). Through continuous research and collaboration with partners, Eli Lilly is constantly developing new therapeutic approaches to improve the quality of life of diabetics worldwide. Eli Lilly is listed on the New York Stock Exchange (NYSE) under the symbol LLY.
Brief analysis & outlook
Although Eli Lilly has faced regulatory obstacles for two planned drugs this year, the stock remains one of the best-performing pharmaceutical stocks. Despite the setbacks, Eli Lilly's pipeline continues to look promising and includes many clinical development projects and studies in phase 1 or phase 2, which will allow Eli Lilly to expand its portfolio in the long term.
The share reached a new all-time high at the end of April and is therefore in a solid upward trend. Since the beginning of the year, the Eli Lilly share has already risen by around 20 %. Although the valuation seems relatively high with a P/E ratio of around 40, it is not unusual for strongly growing companies to have a comparatively high P/E ratio for several years. The current PEG ratio (a key figure that puts the P/E ratio in relation to expected growth) does not yet indicate a strong overvaluation with a value of 2.