Big Pharma’s dogfight to dominate the anti-obesity market

New anti-obesity medications have introduced fresh hope for millions of overweight individuals, not to mention having created an immense industry. Novo Nordisk’s Ozempic is the best-known of these pharmaceuticals, but it constitutes the mere tip of an iceberg that is accumulating mass by the minute. A fistful of rivals aspires to the Danish company’s throne. Some of their new treatments involve just one injection every seven days to lose 15% of one’s weight in 68 weeks, with tolerable side effects. Up until now, the only truly effective option was bariatric surgery, which can be a risky procedure.

These new medications, known as GLP-1 receptor antagonists (referring to a peptide 1 that is similar to glucagon), take effect on different intestinal hormones to make one feel fuller, because food stays longer in a person’s stomach (slowing down gastric emptying) and, at the same time, stimulate the release of insulin from the pancreas, which combined, reduce food intake.

This biological hack has given rise to vast profits for the pharmaceutical companies that manufacture such medications and also, hope. Every year, five million human beings die from obesity-related diseases. By 2030, it is estimated that this figure will rise to one billion. In the United States alone, according to Cornell University, economic losses due to obesity-related sick leave amount to $30 billion per year. The Organisation for Economic Co-operation and Development (OECD) predicts that the epidemic will cost countries, on average, 1.6% of their GDP between 2020 and 2050.

In the race to slim down, Novo Nordisk has become, according to Capital Markets, the leading provider of weight-loss medication. It has quietly become the most valuable company (at $410 billion) in Europe, surpassing luxury group LVMH. Profits of the firm, which makes the popular Ozempic and Wegovy meds, have risen nearly 50% over the last year. Barclays predicts that sales of Wegovy will reach $7.3 billion this year and that those of Ozempic, which was designed to treat diabetes but often prescribed for the overweight, will reach $16.5 billion.

But let’s press pause on this enthusiasm. “Although the GLP-1s and companies that produce them have attracted a lot of investor interest, we are still in the early stages of a long journey towards realizing the potential of these drugs,” says Steve Smith, chief investment officer at Capital Group. “One of the reasons is the size of the market. In 2022, GLP-1 drugs were prescribed to about nine million people in the United States, compared to a global population with obesity of more than one billion.” Another challenge is supply. The medicine is administered in weekly injections, which is causing demand bottlenecks. Novo Nordisk has responded to this by acquiring three manufacturing plants (in Italy, Belgium, and the United States) last February for $11 billion. They are accelerating production because there are other firms working on a new generation of GLP-1 small molecules that could prove even more effective. Amgen, Viking Therapeutics and AstraZeneca are all on the quest for the Holy Grail of thinness.

For the moment, only three GLP-1 medications have been approved to treat overweight and obese individuals: liraglutide and semiglutide (Wegovy and Ozempic), developed by Novo; and tirzepatide (Zepbound), a product from the U.S. giant Eli Lilly. The numbers are certainly adding up. So far this year, they’ve risen to the tune of 29.9%.

A medical cornucopia

Bloomberg has tracked at least 100 companies working on this type of pharmaceuticals. “Although there are enormous opportunities, the competition is becoming fierce and regulation, challenging,” says Sergio Ávila, an IG analyst. He elaborates: “Success will depend on how these companies manage development and commercialization.”

But the industry is showing certain cracks in its armor. “To save their patents, some pharmaceutical companies alter the molecule slightly and register it as a new drug,” says Javier Aledo, an expert at Spain-based International Financial Analysts.

A shortcut to treasure

Goldman Sachs predicts that the GLP-1 market could generate $100 billion, and The Economist stretches that figure to $150 million by 2031. Currently, only 1% to 2% of U.S. residents use these medications. Given that the country has the highest rate of obesity on the planet, alongside Mexico and Korea, it would appear to have the most to gain, and be able to provide the most clients for these treatments.

Across the pond, if these pharmaceuticals work in the long-term, they could improve obesity rates in the European Union, which currently stand at 17%. “In countries with a largely public healthcare system, savings from these treatments could help to alleviate the fiscal situation,” states a source from Capital Economics. In addition, they say, GDP growth could be achieved through higher productivity and healthier populations.

Such are the whispers of the future, but there is no lack of hope surrounding the treatments right now either. Another pharmaceutical designed to aid in weight loss, survodutide (a new dual antagonist of the glucagon/GLP-1 receptors), invented by German pharmaceutical company Boehringer Ingelheim, in collaboration with the Danish firm Zealand Pharma, “demonstrated efficacy among people with obesity and has potential” — according to sources from the German company — “to become the best treatment in its class, considering the 115 million people” who suffer from steatohepatitis associated with metabolic dysfunction, which is expected to be a leading cause of liver transplants by 2030, placing a significant financial burden on healthcare systems.

At the same time, two U.S. firms, Regeneron and BioAge (both declined to comment for this article), are working on one of the side effects of these medications: loss of lean body mass. And going even further into areas of true urgency, GLP-1 pharmaceuticals could also be able to treat illnesses like Alzheimer’s and Parkinson’s, which cause brain inflammation. “There are currently tests in phase 3, and potentially by 2025, we will know their results,” says Daniel Drucker, endocrinology expert at Mount Sinai Hospital in Toronto.

The cost of slimming down

The financial cost of GLP-1 pharmaceuticals turns out to be quite high and currently, treatment lasts for the rest of a patient’s life. This implies a lot of will, and cash, to ensure continued success. “Studies suggest that people go back to their old eating habits and weight once they stop taking the drug,” warns Stephen Freedman, director of analysis of sustainability at Pictet AM. And this is a pricy prescription. Wegovy costs $1,300 a month and Ozempic, $900. Novo Nordisk’s CEO, Lars Fruergaard Jørgensen, proposed flexible pricing for healthcare systems in an interview with the Financial Times.

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