Spotlight on Health ETFs as NVO & LLY Cut Obesity Drug Price in China

Recent reports suggesting that pharma giants Novo Nordisk NVO and Eli Lilly LLY have lowered prices for their blockbuster obesity drugs, Wegovy and Mounjaro, in China, have sent ripples through the healthcare sector. List prices for certain Wegovy dosages in specific Chinese provinces were reportedly cut by nearly 48%, dropping to as low as 987 yuan ($141) per month (as reported by Reuters).

This aggressive move to secure market share in the world's most populous nation sparked immediate investor skepticism about future profitability, leading to a tumble in both companies' share prices, following the release of the news on Dec. 29, 2025. 

For investors seeking exposure to the transformative obesity drug market while mitigating the risks of individual stock volatility, this situation highlights the potential advantage of keeping diversified Healthcare exchange-traded funds (ETFs) in their portfolio.

The Obesity Drug War: Pills, Injections and Intense Competition

The global obesity market has become intensely competitive with the emergence of oral GLP-1 agents, with NVO and LLY being two dominant forces in this market. Notably, Novo secured FDA approval last month for the oral formulation of Wegovy, the first GLP-1 obesity therapy that can be taken without injection, while Eli Lilly has submitted a U.S. NDA for its own oral GLP-1, orforglipron, with launch forecast around 2026.

Beyond these two, Pfizer PFE is re-entering the field via acquisitions and licensing deals after discontinuing its earlier danuglipron program, underscoring how big pharma players are chasing the same “weight-loss pill” opportunity.

In China specifically, where obesity prevalence has risen rapidly, of late, the race to capture more share of this nation’s weight-loss drug market has intensified. With over 65% of China's 1.4 billion population projected to be overweight or obese by 2030 (published by China’s National Health Commission), the potential for obesity drug makers is enormous. 

But intense domestic competition, impending generics and pressure to keep therapies affordable must have forced global pharmaceuticals like Novo and Lilly to cut prices as a strategic play to build patient loyalty and market penetration before a wave of cheaper alternatives arrives. 
This tactic mirrors their recent pricing moves in India and the United States, indicating a global shift toward competitive pricing to maintain volume growth.

Why Healthcare ETFs Might Be the Strategic Choice?

For a prudent investor, the "China price war" is a golden opportunity to pivot. While the long-term demand story for obesity drugs remains strong, navigating the winners and losers in this space, especially with new oral drugs in development worldwide, requires immense expertise and constant portfolio monitoring. 

Therefore, instead of betting on whether Novo or Lilly wins the next round of price negotiations, Healthcare ETFs can offer a better way to capture the entire sector's growth. This diversification will protect your portfolio from the negative impact of price wars, clinical trial setbacks, or regulatory delays affecting any single firm.

Healthcare ETFs to Watch

Considering the aforementioned discussion, you may keep the following healthcare ETFs in your watchlist to capture the overall growth of the pharmaceutical and biotechnology industries, benefiting from the obesity drug boom while spreading risk across dozens of companies.

State Street Health Care Select Sector SPDR ETF XLV

This fund, with asset under management (AUM) worth $39.93 billion, provides exposure to 60 companies from the pharmaceuticals; health care equipment and supplies; health care providers and services; biotechnology; life sciences tools and services; and health care technology industries. Its top three holdings include LLY (15.18%), Johnson & Johnson JNJ (8.82%) and AbbVie ABBV (7.19%). 

XLV has gained 13.3% over the past year. The fund charges 8 basis points (bps) as fees.

Vanguard Health Care ETF VHT

This fund, with net assets worth $17.7 billion, provides exposure to 417 companies that manufacture health care equipment and supplies or that provide health care-related services, and companies that are primarily involved in the research, development, production, and marketing of pharmaceuticals and biotechnology products. Its top three holdings include LLY (12.39%), ABBV (4.85%) and JNJ (4.42%).

VHT has rallied 14.2% over the past year. The fund charges 9 bps as fees. 

iShares U.S. Healthcare ETF IYH

This fund, with net assets worth $3.57 billion, provides exposure to 103 U.S. healthcare equipment and services, pharmaceuticals, and biotechnology companies. Its top three holdings include LLY (14.79%), JNJ (8.56%), and ABBV (6.95%). 

IYH has rallied 12% over the past year. The fund charges 38 bps as fees. 

iShares Global Healthcare ETF IXJ

This fund, with net assets worth $4.50 billion, provides exposure to 114 pharmaceutical, biotechnology, and medical device companies. Its top three holdings include LLY (10.77%), JNJ (6.29%) and ABBV (5.10%). 

IXJ has gained 14.1% over the past year. The fund charges 38 bps as fees. 

VanEck Pharmaceutical ETF PPH

This fund, with assets worth $1.28 billion, provides exposure to 26 largest most liquid pharmaceutical companies. Its top four holdings include LLY (20.766%), Novartis NVS (10.04%), Merck MRK (8.91%) and NVO (6.45%). 

PPH has surged 21.6% over the past year. The fund charges 36 bps as fees. 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research