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ResMed and the great Ozempic debate raging on the ASX

Investors are split over an emerging group of fat loss treatments and their market implications.

Jack Derwin
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Debate rages on about the consequences of these weight loss drugs. EPA/Ida Marie Odgaard.

They've been described as miracle drugs with the potential to solve the obesity epidemic and even upend society, and are being used by everyone from Amy Schumer to Elon Musk. But Ozempic, Wegovy and Monjuaro are also at the centre of one of the most intense debates currently playing out on the ASX.

Short sellers have in recent weeks ramped up bets against dual-listed medical equipment company ResMed based on a thesis that the drugs will reduce demand for its lucrative sleep apnea treatments.

Over the past month alone the stock, which is widely owned by Australian fund managers, is down 30%. This week UBS added to the downward momentum when it slashed its price target for RMD by 36% to USD170, expecting even more of the drugs to be approved.

"[We have concluded] that Lilly's SURMOUNT-OSA trial is likely to succeed in [the first half of] 2024 triggering better US access, and estimate 14% volume headwind for RMD's sleep business by the 2030s," UBS said.