Drug makers these kinds of as Eli Lilly and Novo Nordisk have been very hot favorites among the traders in the previous 12 months, specified the favourable reception to their pounds-decline medications. “The uptake of GLP-1 (glucagon-like-pepitide-1) course AOMs (anti-weight problems drugs) has been unexpectedly robust, specially in the U.S. the place the medicines are propelling weight-centric ambitions to therapeutic rules,” Morgan Stanley’s analysts led by Sean Wu explained in a Jan. 28 investigate take note to investors. On the other hand, the implication of the medicines has been “fewer apparent” for Asia, in accordance to the expense financial institution which named numerous possibilities — and some top stocks — to play the concept in the location. The “decreased prices of obesity and a preference for much more organic types of pounds manage,” in Asia, guide to a restricted impression on the usage of anti-weight problems remedies in the location, Morgan Stanley’s analysts mentioned. The premiums of obese or obese men and women primarily based on the Globe Health Organization’s (WHO) definition ranges from 20% to 50% in Asia, drastically reduced than the 70% to 75% in the U.S, the analysts observed. The only region in Asia Pacific that bucks the craze is Australia which has over weight and weight problems rates of 62% and 76% in ladies and males, respectively. According to WHO , individuals with a body mass index (BMI) among 25 and 30 are deemed ‘overweight’, while individuals with a BMI increased than 30 are considered overweight. Below-the-radar inventory picks Morgan Stanley reckons the way to perform the being overweight topic in Asia is through names concerned in GLP-1 drug enhancement that “could find upside in burgeoning overseas markets.” Just one this kind of company is WuXi AppTec , a China-primarily based contract advancement and production business. Calling it “leading beneficiary as world wide need for GLP-1 drugs drastically outpaces capacity,” Morgan Stanley has an obese score on the stock. Other best shares in the investment bank’s checklist consist of drug manufacturers Innovent Biologics from China and Chugai Pharmacuetical from Japan, as nicely as EBOS , a drug distributor headquartered in New Zealand. Morgan Stanley has an financial commitment horizon of just over six months for WuXi AppTec and Innovent and in excess of 12 months for Chugai and EBOS. “Chugai is a vital Asia-based mostly GLP-1 drug developer with immediate publicity to overseas markets, even though Innovent is a major developer of GLP-1 drugs that is anticipated to profit from the likely substantial China current market,” the bank’s analysts wrote. Chugai experienced manufactured Orforglipron — a treatment approved for fat loss and sort 2 diabetic issues — which was certified for distribution by Eli Lilly in 2018. Morgan Stanley’s analysts estimate that globally profits of Orforglipron could strike $7 billion in 2023. Whilst Chugai has however to announce a royalty rate, the lender estimates it could get annual royalty cash flow of close to or over $1 billion dependent on a price of 15%. Somewhere else, it sees alternatives for EBOS following the Australian government’s approval for it to distribute weight problems medication. “Australian government’s choice to fund GLP-1-centered therapies for being overweight underneath the Australian Pharmaceutical Added benefits Plan (PBS) could generate a multi-billion-dollar domestic industry, with a positive influence on pharmaceutical distributors this sort of as EBOS,” Morgan Stanley’s analysts wrote, introducing that EBOS could obtain a margin on the dollar price of income distributed. Shares of WuXi AppTec and Innovent are traded on the Hong Kong Stock Trade. Both of those shares are held in the KraneShares MSCI All China Well being Treatment Index ETF . In the meantime, Chugai and EBOS are traded on the Japanese and Australian inventory exchanges. Chugai has a 2.7% holding in the Goldman Sachs Future Health Treatment Equity ETF although EBOS has a 4% weightage in the iShares MSCI New Zealand ETF . — CNBC’s Michael Bloom contributed to this report.