Innovation in obesity treatments, Alzheimer’s detection and medical-device applications is setting the stage for a number of health-care companies to capitalize on hundreds of billions of dollars of growth in those areas over the coming five years, analysts at Morningstar predict.
Karen Andersen, Morningstar’s director of health-care analysis, and Debbie S. Wang, a medical-device analyst, outlined their picks in a “Future of Health Care” discussion at the Morningstar Investment Conference in Chicago last week; Here’s how they size up the market in three key areas:
GLP-1 drugs
Originally designed as treatments for Type 2 diabetes, the GLP-1 class of drugs also has become the in-demand option to battle obesity. Ozempic, Wegovy and Zepbound, among others, have become household names in the process.
“The insulin market is actually flat. It’s the GLP-1 obesity sales that are driving the market,” Andersen said. “But they’re also finding these drugs are helping a lot of other patients including cardio, liver, kidney, addiction, inflation and neurodegeneration.”
The biggest stock winners so far have been Novo Nordisk (Ozempic and Wegovy) NVO and Eli Lilly (Zepbound) LLY and they look to remain the main drivers of growth in the field, Andersen said. Watch Roche RHHBY and Amgen AMGN , which “could be challengers” by 2029, she said.
Alzheimer’s
There are three early-stage Alzheimer’s drugs that work to remove amyloid plaque in the brain: Leqembi, developed by a consortium of three biotech firms in Japan, Sweden and the U.S. lead marketer Biogen BIIB , Lilly’s Kisunla and Trontinemab, a Roche/Genentech collaboration.
Another avenue of Alzheimer’s treatments target tau proteins rather than amyloids. Researchers at Biogen and Johnson & Johnson JNJ , among others, are investigating this approach.
TAVR
It stands for transcatheter aortic valve replacement and is a minimally invasive treatment that substitutes for open-heart surgery, resulting in far fewer hospital days post procedure, in some cases being done on a one-day outpatient basis. Two other procedures, TTM and TTV, target mitral and tricuspid heart valves.
“It’s a $7 billion market right now, but growth was accelerating in 2024. It’s really in its nascent stage,” Wang said. She pointed out that there are about 500,000 potential patients in TAVR’s target market, but that mitral-valve replacement therapy has a five times greater reach.
The clear stock winner here is Edwards Life Sciences EW , which “has the most comprehensive portfolio of devices,” Wang said. (See photo of Edwards patients at the top of this article.) Abbott ABT would be a distant second choice, she said.
Chronic pain
Spinal cord stimulation is an innovation in pain control that will compete with 1.2 million back surgeries per year in the U.S., which have a 50% success rate, Wang said. The market for the treatment could be $6 billion by 2032, double today’s total.
The stock pick here is Medtronic MDT which controls 50% of the spinal cord stimulation market. Abbott and Boston Scientific “are still trying to catch up,” Wang noted.
Hypertension
Renal denervation is the term for a novel approach to controlling high blood pressure using a device that interrupts nerve signals in the artery that leads to the kidney.
“There are 1 billion adults globally with uncontrolled hypertension,” Wang said. “The renal denervation market was only $100 million in 2024, but it could be $3.5 billion by 2032.”
Medtronic and Boston Scientific lead the pack on this treatment.
4 0verall health-care picks
Morningstar’s top overall picks in the health-care sector, based on its measures of valuation and innovation:
“These are the four names that stand out on Morningstar’s screens,” Andersen said. If you only wanted to pick one, consider Pfizer: the stock carries a dividend yield of just north of 7%, a handsome payday compared to the market median of a little less than 3%.
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