As one of the leading players in the weight loss drug market, the underperformance of Zepbound, a heavyweight weight loss drug under Eli Lilly and Company (LLY.US), in the third quarter has raised concerns among investors about the prospects of the weight loss drug market. Fortunately, the subsequent release of Wegovy sales performance by Novo Nordisk (NVO. US) reassured investors.
The weight loss drug market still has broad prospects, and most institutions predict that the market size will reach billions of dollars by the end of this decade. In addition to Eli Lilly and Novo Nordisk, which currently almost monopolize the weight loss drug market, many pharmaceutical companies are intensifying their research and development of their weight loss drugs in order to seek a share of this huge potential market.
The sales of Eli Lilly Zepbound fell short of expectations, scaring the market. Novo Nordisk Wegovy reassured the market
Lilly's third quarter 2024 results, released at the end of October, showed that the sales of its heavyweight weight loss drug Zepbound (with active ingredient teppone) fell short of market expectations, which really made investors who are concerned about the prospects of the weight loss drug market sweat.
According to the financial report, Lilly's revenue for the third quarter was $11.439 billion, a year-on-year increase of 20%. However, Zepbound, the most closely watched product in the market, had sales of only $1.26 billion in the current quarter, far below analysts' expectations of $1.76 billion. The sales of Mounjaro, a diabetes drug with Tilpolide as the active ingredient, in the current quarter were 3.11 billion dollars, also lower than the analyst's expectation of 3.7 billion dollars.
For Zepbound and Mounjaro's lower than expected sales in the third quarter, Lilly attributed it to drug wholesalers cutting inventory of these two drugs. The pharmaceutical giant stated that the increased supply enabled the company to fulfill delayed orders from wholesalers in the second quarter, resulting in an increase in Zepbound and Mounjaro inventory owned by wholesalers in the second quarter. In the third quarter, these wholesalers used some of their existing inventory instead of purchasing more from the company, which suppressed sales of the two drugs.
During the third quarter earnings conference call, Lilly executives insisted that the potential demand for drugs such as Zepbound remains strong in the market. The reason is that there is too much inventory in the channel. I think we really can't control it and don't want to try to control it, "said Dave Ricks, CEO of the company." But the reality is that Lilly's downstream customers - wholesalers, retailers - are deciding for themselves at what level they want to store which dosage form among the 12 different dosage forms
Dave Ricks pointed out that wholesalers are dealing with financial pressures and other limiting factors, and they must also address the limitations of cold chain capacity to ensure the quality of drugs from production to delivery. He added that Lilly has not yet started its so-called 'demand stimulation campaign', which involves advertising and promoting Zepbound, and the company will begin these efforts in November. Other executives from Lilly also stated that the company is investing heavily in its direct to consumer website, which provides remote medical prescriptions and direct home delivery of certain medications to expand patient access channels.
Some Wall Street analysts also agree with Lilly's statement. Citi analyst Geoff Meacham said, "The main culprit is the inventory reduction of Zepbound and Mounjaro, not weak demand." Jared Holz, a stock strategist at Mizuho Healthcare, also pointed out that destocking - selling existing drug inventory instead of adding more inventory - is surprising, especially when demand for these drugs is high. Jared Holz added that Lilly has invested $10 billion to $15 billion this year alone to expand its production capacity, which should "help reverse some of the trends in the report". However, some analysts do not agree with Lilly's statement. Barclays analyst Carter Gould said that inventory factors may only explain a "small part" of the decline in drug revenue, which is about 20%.
On October 30th, after Eli Lilly released its third quarter financial report, the US stock closed down more than 6%. As one of the "dual leaders" in the weight loss drug market, the sales performance of Eli Lilly Zepbound has also raised concerns among investors about whether there are signs of weak demand for weight loss drugs.
However, the financial report released by Novo Nordisk a week later gave the market a reassurance. According to the financial report, Novo Nordisk's net sales in the third quarter were 71.311 billion Danish kroner, a year-on-year increase of 22%. Among them, the highly anticipated best-selling weight loss drug Wegovy (with active ingredient semaglutide) had a quarterly sales revenue of 17.304 billion Danish kroner, a year-on-year increase of 79%, far exceeding the market expectation of 15.6 billion Danish kroner. Despite a decrease in price, Wegovy's sales in the US market still increased by approximately 50% after more insurance companies agreed to pay for the drug.
Boosted by strong drug sales, Novo Nordisk has also raised its full year performance guidance. Novo Nordisk expects that its annual sales in 2024 will increase by 23% -27% at a fixed exchange rate, compared to the previously expected growth of 22% -28%; It is expected that the annual operating profit will increase by 21% -27%, compared to the previous expectation of 20% -28%.
The scale will reach billions of dollars! The market prospects for weight loss drugs are still broad
By 2035, a quarter of the global population is expected to suffer from obesity. Since the breakthrough of GLP-1 drugs, the development momentum of the global weight loss drug market is constantly increasing. Many pharmaceutical companies have realized the enormous potential of the weight loss drug market and have invested resources in drug research and development in order to gain a share of the market. At the same time, established pharmaceutical companies are further expanding their market share by developing new drugs and expanding production capacity.
The market generally expects that the size of the weight loss drug market is expected to reach billions of dollars around 2030. BMO Capital Markets predicts that annual sales of weight loss drugs will reach $150 billion by 2030, higher than the bank's forecast of $100 billion last year. Goldman Sachs also raised its outlook for the global weight loss drug market size by 2030 in May this year from a forecast of $100 billion at the end of last year to $130 billion. Leerink Partners, a financial services company, predicts that by 2032, the global market size for weight loss drugs will rise to $158 billion.
In its five-year outlook released earlier this year, healthcare analytics company IQVIA stated that by 2023, people worldwide will have spent $24 billion on weight-loss drugs, and this number is expected to rise to $131 billion by 2028. This means an annual growth rate of 27%, higher than the previously predicted annual growth rate of 13%.
Michael Kleinrock, Senior Research Director at IQVIA Data Science Institute, stated that the increase to $131 billion will depend on how long patients continue to use weight loss drugs, whether these drugs can be used to treat other diseases, or whether pharmaceutical companies develop new sales models that directly target consumers.
Which players are worth paying attention to as numerous pharmaceutical manufacturers flock to the track?
1. Novo Nordisk
As one of the leaders in the weight loss drug market, Novo Nordisk has achieved great success in GLP-1 drugs, especially semaglutide. However, Novo Nordisk clearly hopes for more than that. The company's most attractive potential product to attract market attention is undoubtedly the upcoming revolutionary weight loss therapy CagriSema.
CagriSema is a compound mixture composed of semaglutide and the amygdalin analogue Cagrlintide. Among them, canagliptin is a long-acting amygdalin analogue that plays a role in blood glucose regulation by slowing down gastric emptying and promoting satiety, thereby preventing postprandial blood glucose levels from increasing. Kagliptin has been validated in previous studies to have better hypoglycemic and weight loss effects than semaglutide monotherapy.
It is reported that Novo Nordisk expects CagriSema to achieve at least 25% weight loss, without any additional side effects compared to the previous generation of weight loss drug Wegovy. The company stated that CagriSema will effectively solve the problem of "weight rebound after discontinuation" and become the most effective weight loss medication to date.
Analysts from globally renowned pharmaceutical data consulting firm Evaluate Pharma predict that 2025 will be a year for CagriSema. The agency's sales forecast for Cagrisema is 20.5 billion US dollars by 2030 (indications include obesity, diabetes and cardiovascular diseases). Cagrisema's net present value (NVP) is estimated to be $81.3 billion, and it is expected to become a new pillar asset. It is seen as the key to maintaining Novo Nordisk's revenue growth after Wegovy's patent protection expires in 2032, ensuring Novo Nordisk's leadership position in the field of weight loss drugs remains secure.
The oral weight loss drug Amycritin being developed by Novo Nordisk is also worth paying attention to. The Phase I research data released by Novo Nordisk at the annual meeting of the European Association for the Study of diabetes (EASD) in September showed that among overweight/obese adults without diabetes, the daily oral administration of Amycretin had good tolerance and safety, and the average weight loss was 13.1% in only 12 weeks, while the average weight loss in the placebo group was only 1.1%. In addition, by the end of treatment, patients in the Amycritin group had not yet reached the weight loss plateau, which means that their weight may still continue to decrease.
2. Li Lai
The GLP-1/GIP/GCG triple target agonist Retatrutide, currently under development by Lilly, is regarded as the next generation product of iterative tiropatide. The experimental data shows that compared to tilpotide, Retarutide's phase 2 performance is even more astonishing - in the phase 2 clinical trial, the average weight loss rate of Retarutide from baseline (initial weight) was 17.5% at 24 weeks and 24.2% at 48 weeks.
Lilly believes that Retatrutide has the potential to further improve its therapeutic effect on the basis of tilpotide, with an expected weight loss of 22-24% at the highest dose, mainly due to a reduction in fat. The company registered the 9th phase III clinical trial of Retatrutide on October 28th, with head to head use of tilboptide for weight loss. The Phase III clinical trial plans to enroll 800 obese patients and is expected to be completed by April 2027.
In addition, the oral version of the GLP-1R agonist Orforglipron developed by Eli Lilly has shown remarkable weight loss effects in trials. Phase 2 clinical data shows that once daily oral administration of Orforgelipron resulted in an average weight loss of 14.7% in obese or overweight adults at 36 weeks. Although the oral version requires daily medication, patients clearly have a higher degree of compliance. Eli Lilly registered Orforgelipon for another phase III weight loss clinical trial in September this year. The purpose of this Phase III clinical trial is to evaluate the efficacy and safety of Orforge lipon as a weight loss maintenance therapy. It is planned to enroll 480 obese patients and is expected to be completed by January 2026.
Lilly is also considering expanding the testing of its best-selling weight loss medication to individuals who are not yet overweight but at risk of gaining weight. Lilly CEO Dave Ricks stated that the company is planning to study the effectiveness of its anti obesity drugs in populations whose current BMI (body mass index) is not sufficient to be classified as overweight. At present, the trial subjects of Eli Lilly's Zepbound and experimental weight loss drug Orforge lipon are patients with a BMI of 30 or higher, or a BMI of 27 or above and weight related health problems. Dave Ricks believes that, especially for Orforgelipron, this medication can bring more moderate weight loss effects compared to other treatment methods, so it may be necessary to lower this threshold.
3. Anjin
The weight loss drug being tested by American pharmaceutical giant AMGN. US is called MariTide. Previously, a small-scale early clinical trial showed that patients treated with the highest dose of MariTide, 420 milligrams, lost an average of 14.5% weight within 12 weeks. In contrast to currently marketed weight loss drugs, MariTide seems to help patients maintain a longer weight loss effect after discontinuing the medication.
In addition, the dosing frequency of MariTide may be lower than existing drugs - Novo Nordisk's Wegovy and Eli Lilly's Zepbound require weekly injections, while MariTide can be re injected once a month or even longer. A lower frequency of administration may become a major selling point for MariTide, as many patients do not want frequent injections.
4. Viking Therapeutics
The progress of VK2735, a weight loss drug under the small pharmaceutical company Viking Therapeutics (VKTX. US), has also attracted market attention. In early November, the company announced that in an early study, participants taking 100 milligrams of VK2735 lost an average of 8.2% weight within 28 days, compared to 6.8% weight loss in patients taking a placebo. This indicates that its experimental drug VK2735 is more effective in reducing patient weight at higher doses compared to early formulations, laying a solid foundation for its competition with heavyweight drug manufacturers such as Novo Nordisk and Eli Lilly.
5. Zealand Pharma
Danish biotech company Zealand Pharma announced in September that its phase 1b trial of Dapiglutide, a dual agonist of GLP-1/GLP-2 receptors, achieved positive results. In addition, the company announced in June that its long-acting amygdalin analogue Petrelinide had achieved positive top line results in phase Ib trials. This may make it stand out in the competition with Novo Nordisk and Eli Lilly's weight loss drugs, providing a potential high safety alternative for obese patients who cannot tolerate GLP-1, and the potential market size may be much larger than GLP-1 based weight loss drugs.
Zealand Pharma pointed out that a series of clinical data and studies currently show that Petrelinide has the potential to provide the same weight loss effect and better tolerance compared to GLP-1 drugs, thereby providing a better weight loss experience; This drug will also retain more lean muscles and achieve higher quality weight loss.
6. Altimmune
The latest clinical trial data released by Altimmune (ALT. US), a relatively unknown pharmaceutical company, at the end of June showed that the company's GLP-1/GCG receptor dual agonist pemwiduti achieved the best in class effect in promoting weight loss while maintaining lean body mass (muscle mass).
It is reported that the trial results showed that only 21.9% of the weight lost by patients receiving pemvidutide treatment at week 48 was attributed to lean body mass, while 78.1% was attributed to fat. Prior to this, although GLP-1 weight loss drugs had outstanding weight loss effects, there had always been a problem that not only fat was lost, but also lean body mass - for example, about 40% of the weight lost by semaglutide at week 68 was lean body mass. Therefore, the positive data released by Altimmune may help it gain an advantage in the weight loss drug market in the future.
7. Roche
At the beginning of December last year, RHHBY. US, a Swiss pharmaceutical giant, announced that it would acquire Carmot Therapeutics, a US private clinical biotechnology company, for $2.7 billion in cash, and would acquire three clinical phase assets with the best potential in the same category in obesity and diabetes, including CT-388, a dual GLP-1/GIP receptor agonist used to treat obese patients with or without type 2 diabetes; CT-996, a small molecule GLP-1 receptor agonist, is designed to treat obese patients with or without type 2 diabetes; CT-868, a dual GLP-1/GIP receptor agonist, is used to treat overweight or obese type 1 diabetes patients.
However, data released by Roche in September showed that the highly anticipated weight loss drug candidate CT-996 had a high proportion of temporary side effects in the early stages of trials. In terms of efficacy, Roche said that obese patients without diabetes who took CT-996 once a day lost an average weight of 6.1% in four weeks (adjusted by placebo).
It is reported that all 25 trial participants experienced mild to moderate side effects, or adverse events in industry terminology. Regarding this, Roche stated that the first phase of the trial followed the convention of increasing drug doses, a process known as titration, which was faster than the planned later stages of the trial to quickly detect any unforeseen side effects. The company stated that the frequency of adverse events is consistent with rapid titration and early development, and these data support further research on CT-996 in studies with longer duration, larger sample sizes, and slower titration rates.