Pfizer Inc. (PFE), Arena Pharmaceuticals, Inc. (ARNA), VIVUS, Inc. (VVUS): Two Lucrative Drug Markets You Should Avoid

A third of Americans
The obesity market is so large that more than a third of Americans are eligible to take Arena Pharmaceuticals, Inc. (NASDAQ:ARNA)‘ Belviq and VIVUS, Inc. (NASDAQ:VVUS)‘ Qsymia. Yet few are. Sales of both drugs have been pitiful, registering just a few million each quarter in their early launches

The companies have a couple of challenges to convert potential patients into actual patients.

First, they’ve got to persuade insurers to pay for the drug. Both drugs are too expensive to expect patients to pay out of pocket. Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) and VIVUS, Inc. (NASDAQ:VVUS) are making progress, but most Americans still don’t have prescription coverage for the drugs.

Second they have to convince doctors to prescribe the drug. With exercise and diet being relatively safe — sore muscles and shin splints aside — doctors are leery of prescribing obesity drugs, especially after many doctors jumped on the fen-phen bandwagon.

Both issues can be overcome, but it’s going to take time and I expect sales will remain lackluster for the immediate future.

Watch and wait for now
It’s easy to get excited by these large markets with unmet needs, but investors would be better off watching from the sidelines for now. Wait for the Alzheimer’s and obesity markets to work through their respective issues and then invest. You’ll likely miss some upside compared to jumping in now, but avoiding the downside makes it worth it.

The article 2 Lucrative Drug Markets You Should Avoid originally appeared on Fool.com and is written by Brian Orelli.

Fool contributor Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Johnson & Johnson.

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