Pharma giants battle for control of obesity drug industry

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What next for Wegovy?

Danish pharmaceutical company Novo Nordisk launched its weight-loss drug Wegovy in the UK last week despite serious supply shortages, as the US said supplies of the starter doses of the drug will remain limited across the country.

So what? The battle for the obesity drug market is just beginning. Novo Nordisk and US pharma giant Eli Lilly are the early frontrunners in controlling a sector expected to be worth $150 billion by the end of the decade, with dozens of competitors in development. 

By the numbers:

£343 billion – Novo Nordisk’s stock market valuation on 4 September (up 34 per cent since January).

$6.1 billion – Novo Nordisk’s estimated total sales from weight-loss drugs in 2023 (expected to reach $15 billion annually in 2027).

$150 billion – predicted market size for weight-loss drugs by 2031, a similar size to the market for all cancer drugs. 

4 billion – estimated number of overweight or obese people in the world by 2035, up from one billion today.

66 per cent – share of Denmark’s GDP growth generated by the pharmaceutical sector in 2022. 

Wegovy has helped Novo become Europe’s most valuable listed company last week and contributed to the majority of Denmark’s economic growth this year, as well as lower interest rates and mortgage rates, as

• overseas sales of Wegovy and Ozempic, Novo’s diabetes treatment with the same active ingredient, pushed up the value of the Danish krone. 
• The krone is pegged to the euro, so the Danish central bank intervened to keep interest rates slightly lower than those in the eurozone to control the value of the currency.

How the drugs work. Both Ozempic and Wegovy contain semaglutide, which lowers blood sugar levels and regulates insulin (crucial for people with Type 2 diabetes). But it also imitates a hormone called glucagon-like peptide-1 which limits appetite, in turn helping with weight loss. 

A similar active ingredient – tirzepatide – is responsible for weight loss effects in Mounjaro, another popular diabetes medication developed by Eli Lilly. Mounjaro was launched in the US for type 2 diabetes last year and is expected to be approved for weight-loss treatment by the end of 2023. 

Eli Lilly has already reported earnings driven by Mounjaro of just under $1 billion in the second quarter alongside a 63 per cent gain in share prices since January, making it Novo’s biggest competitor. Studies have shown more weight loss with Mounjaro than Wegovy.

“We think it’s Novo and Lilly, and everyone else is just scrambling to keep up,” Emily Field, head of European pharmaceutical equity research at Barclays, told CNBC. “For both, demand has outpaced even their most bullish assumptions of what they’re able to supply.”

Other pharma giants like Pfizer and Amgen are creating weight-loss drugs (potentially in pill form), while a recently launched obesity drug tracker ranked 70 obesity treatments currently in development. For now, JP Morgan expects Novo and Lilly to control 90 per cent of the market.

In the US, overall obesity affects 

• 100 million (41.9 per cent) adults;
• 14.7 million (19.7 per cent) children; and 
• accounts for approximately $147 billion in annual health care costs. 

Obesity rates in the UK are some of the highest in Europe and cost the NHS £6 billion annually – a figure set to rise to over £9.7 billion each year by 2050. People in the UK will be able to access the prescription medication at a price between £199 and £295 (five times cheaper than in the US). 

And finally. Last month Novo released the results of a clinical trial that suggested Wegovy can also reduce the risk of major cardiovascular events by 20 per cent. That may allow them to get more US insurers to pay for the drug – opening up even greater demand.

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