Dress by Dior, body by Ozempic. This year's Oscar discussions won’t only be about who made the outfit, but who made the body that wears it. In some cases, the answer is a weight-loss drug like Novo Nordisk’s Ozempic and Eli Lilly’s Mounjaro. The blockbuster treatments are a cultural phenomenon, and are becoming a financial one too.

For traditional luxury goods, glamorous customers have always been a part of the business model. Stars are supplied with fancy items, and wearing them generates publicity. When Michelle Yeoh walks the red carpet in a Dior dress, or Anne Hathaway carries a Birkin bag, luxury firms like brand-owners LVMH and Hermes International essentially get advertising. For their investors, that helps sustain higher pricing power, higher margins, and valuations.

That hasn’t tended to be the case for drugmakers. Marketing of pharmaceuticals tends to rely on influencing doctors, and advertising directly to patients, both of which come at a cash cost. The top 10 drugmakers spent $8.1 billion on advertising in 2022, according to data firm Vivvix. At Lilly, for example, marketing, selling and administrative costs ate up 22% of revenue in 2023, with advertising equaling about 3% of revenue. Ozempic and Mounjaro raise the idea of a different business model, where the customers can effectively become the advertising, helping to ensure that demand exceeds supply. That’s despite list prices for the drugs of around $1,000 a month.

As far as company valuations are concerned, these drugmakers are already getting a luxury premium. Eli Lilly, with a market capitalization of $740 billion, trades at 58 times estimated forward earnings, according to LSEG. That compares with LVMH’s 26 times earnings multiple. Even Hermes, trading at 49 times its forecast net income, looks a relative lightweight. Seen by another metric, the Mounjaro-maker’s enterprise value is 17 times its estimated revenue, where peer drugmakers are valued at more like 5 times.

In fairness, the pharma companies aren’t peddling their medications as objects of celebrity desire. Quite the opposite: Lilly has taken out advising that weight-loss drugs are for patients with real need, not simply for squeezing into a smaller tuxedo. That’s a big difference from companies that have spent generations honing their luxury credentials. But for investors who covet makers of in-demand products with happy, attractive customers – with all of the resulting boost to price and profit – there may be little difference.

(Additional reporting by Jennifer Saba)