Five Stocks to Consider When Investing in the Diabetes Market
Diabetes is a chronic disease that impairs our body’s ability to produce insulin or use it to create energy from the food we eat. The inability to make or use insulin results in increased glucose levels in the blood or hyperglycaemia. Unfortunately, diabetes is a health condition that affects millions of people around the world.
Prevalence of Diabetes
The US Centre for Disease Control and Prevention (CDC) reports that over 34 million American adults 18 or above (13% of the adult population) had diabetes in 2018. Additionally, prediabetes among adults has remained steady from 2005-2008 to 2017-2020.
Globally, around 537 million adults (aged 20 to 79) were living with diabetes in 2021, according to the International Diabetes Federation (IDF). The total number of diabetics is projected to rise to 643 million by 2030. In terms of cost, diabetes was responsible for at least $966 billion in health expenses in 2021.
In 2021, the countries with the highest rate of diabetics included Pakistan (30.8%), French Polynesia (25.2%), Kuwait (24.9%), Nauru (23.4%), and New Caledonia (23.4%). Other countries with high rates of diabetes include Egypt (20.9%), Qatar (19.5%), and Sudan (18.9%). Based purely on the number of diabetics, China has the highest prevalence with around 141 million people suffering with the disease in 2021. By the year 2045, it is predicted that China will have around 174 million people with diabetes.
Types of Diabetes
There are two main variants of the disease, Type 1 and Type 2.
Type 1 is the less common type and is characterized by an autoimmune response in which a person’s body attacks insulin-producing cells. This form of diabetes usually occurs in children and adolescents. People with type 1 diabetes require regular insulin injections to maintain blood glucose levels.
Type 2 diabetes accounts for the majority of cases and is often brought on by lifestyle choices. Type 2 diabetics have insulin resistance, meaning their body does not properly use the insulin it produces.
Investing in Diabetes Stocks
The diabetes market includes companies that mostly focus on diabetes, as well as companies for whom diabetes-related products are one part of their large portfolio. Companies that have diabetes management products as a large part of their overall business are the focus of this article.
1. Novo Nordisk (NYSE: NVO)
Novo Nordisk is a Danish multinational pharmaceutical company, focusing on diabetes and obesity, along with haemophilia and growth disorders. The company claims to produce 50% of the world’s insulin supply, with over 34 million people using their diabetes-related products. The company’s diabetes care products include the NovoPen series insulin pens, FlexTouch GLP-1 pen, and more.
NVO has a market cap of $237.83 billion. During the first half of 2022, the company’s North American sales increased by 24% at CER compared to the first half of 2021. Its diabetes and obesity segment rose by 19%. The main driver of this increase was a 45% growth in GLP-1 diabetes products. The stock price of NVO increased by 10.66% in the past year, from $95.136 on October 6, 2021 to $105.28 on October 6, 2022.
2. Tandem Diabetes Care Inc. (NASDAQ: TNDM)
Tandem is an American medical device company focusing on solutions for diabetics. The company’s flagship product is the t:slim X2 insulin pump. TNDM offers the Control-IQ automated insulin dosing (AID) algorithm on the device, which is designed to help keep the patient at their desired glycaemic levels for longer.
Tandem reported a 14% increase in US sales in Q2, 2022 compared to Q2, 2021. International sales also increased by 23%. TNDM has a market cap of $3.43 billion, and its stock price decreased from $123.16 on October 6, 2021 to $53.45 on October 6, 2022.
3. DexCom Inc. (NASDAQ: DXCM)
DexCom is an American company that specializes in continuous glucose monitoring systems for diabetics. The company’s leading product is the mobile CGM Dexcom G6, which provides real-time glucose information every five minutes. DXCM has launched its Dexcom ONE CGM in the UK and plans on launching the product in Spain as well.
In Q2 2022, DXCMs revenue grew 17% compared to Q1 2021. The company’s US revenue grew 11%, while its international revenue grew 39%. Dexcom has a market cap of over $36.15 billion, and its stock price has also experienced declines compared to the same time last year (from $135.46 on October 6, 21, to $92.90 on October 6, 2022).
4. NuGen Medical Devices Inc. (TSXV: NGMD)
NuGen is a Canadian company specializing in needle-free injection devices for various sectors, including diabetes, dental, cosmetic, veterinary, and home healthcare. The spring-loaded mechanism of its innovative needle-free injection device releases the drug through a fine jet stream that penetrates the skin to deliver the medicine.
NGMD’s needle-free injection InsuJet has been approved by Health Canada for insulin delivery. The company recently announced DTC Eligibility and began trading on the OTCQB in the US under the ticker NGMDF. NuGen has a market cap of $7.05 million, and since January 2022, its stock price has fallen from $0.30 (January 4, 2022) to $0.075 on October 6, 2022.
5. Insulet Corp. (NASDAQ: PODD)
Insulet is an American healthcare company offering a wearable and tubeless insulin delivery system called Omnipod. The company recently announced the full market release of Ominpod 5 in the United States.
PODD recently reported Q2 2022 revenues of over $299 million, which is a 13.8% increase compared to the previous year. The company has a market cap of over $16.96 billion, and its stock price has fallen from $291.63 on October 6, 2021, to $244.26 on October 6, 2022.
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