ZACKS·2026-01-02 15:56Core Insights - Pharma giants Novo Nordisk (NVO) and Eli Lilly (LLY) have significantly reduced prices for their obesity drugs, Wegovy and Mounjaro, in China, with some Wegovy dosages cut by nearly 48% to as low as 987 yuan ($141) per month [1][2][10] - This price reduction has raised concerns among investors regarding future profitability, leading to a decline in share prices for both companies [2][10] - The competitive landscape for obesity drugs is intensifying, with the emergence of oral GLP-1 agents and increasing pressure from domestic competitors and impending generics [4][7] Industry Overview - The global obesity drug market is becoming highly competitive, with NVO and LLY as key players. Novo recently received FDA approval for an oral version of Wegovy, while Eli Lilly is preparing to launch its own oral GLP-1, orforglipron, in 2026 [4][6] - In China, the obesity prevalence is projected to exceed 65% of the population by 2030, creating a substantial market opportunity for obesity drug manufacturers [6] - The pricing strategies of NVO and LLY reflect a global trend towards competitive pricing to maintain market share and patient loyalty amid rising competition [7] Investment Strategy - For investors looking to capitalize on the obesity drug market while minimizing individual stock risks, diversified Healthcare exchange-traded funds (ETFs) are recommended [3][9] - The "China price war" presents an opportunity for investors to pivot towards ETFs, which can provide exposure to the overall growth of the pharmaceutical sector without the volatility associated with individual stocks [8][9] Healthcare ETFs to Consider - State Street Health Care Select Sector SPDR ETF (XLV): AUM of $39.93 billion, exposure to 60 companies, top holdings include LLY (15.18%), JNJ (8.82%), and ABBV (7.19%), gained 13.3% over the past year [12][13] - Vanguard Health Care ETF (VHT): Net assets of $17.7 billion, exposure to 417 companies, top holdings include LLY (12.39%), ABBV (4.85%), and JNJ (4.42%), rallied 14.2% over the past year [14] - iShares U.S. Healthcare ETF (IYH): Net assets of $3.57 billion, exposure to 103 companies, top holdings include LLY (14.79%), JNJ (8.56%), and ABBV (6.95%), gained 12% over the past year [15] - iShares Global Healthcare ETF (IXJ): Net assets of $4.50 billion, exposure to 114 companies, top holdings include LLY (10.77%), JNJ (6.29%), and ABBV (5.10%), gained 14.1% over the past year [16] - VanEck Pharmaceutical ETF (PPH): AUM of $1.28 billion, exposure to 26 pharmaceutical companies, top holdings include LLY (20.766%), NVS (10.04%), MRK (8.91%), and NVO (6.45%), surged 21.6% over the past year [17]