Eli Lilly and Novo Nordisk have taken over the pharmaceutical industry with just one new drug. Now, everyone else wants their competition-killing obesity drug, but are they too late?

2023 was such a bad year for pharmaceutical companies that Goldman Sachs analysts labelled it the “most significant annual underperformance in 30 years.” Novo Nordisk and Eli Lilly’s meteoric rises were the only bright sparks in the year, thanks to their line of diabetic/weight loss drugs.

Just like how the Covid-19 pandemic sent share prices and profits soaring, obesity drugs have done the same for the Danish and American companies, respectively. But unlike Covid, the obesity pandemic isn’t going away soon, which is why every other pharmaceutical company wants to get in quickly.

Unfortunately for them, Novo and Lilly are already too far ahead.

The ever-worsening obesity pandemic

According to the World Health Organisation, worldwide obesity has more than tripled since 1975. There are over 1.9 billion overweight people in the world, and this is predicted to double by 2035. Any company that is able to solve the obesity pandemic could potentially reap the benefits for decades.

While many attempts had been made to create weight loss pills, none had significant clinical success until incretin mimetics.

Incretin mimetics mimic the human incretin hormone glucagon-like peptide-1 (GLP-1), which enhances insulin secretion and limits glucagon release. While this function primarily helps people with type 2 diabetes (T2D), it is also effective for weight loss.

Novo’s GLP-1 drug, called Wegovy, is a weekly injectible that can help patients lose 15% of their body weight in a year when combined with dietary changes and exercise. Patients who took the placebo only lost 2.5% of body weight. This was the first GLP-1 drug approved for weight loss.

The second was Eli Lilly’s Zepbound, which helped patients lose as much as 20.9% of their body weight in 17 months. Not only is Zepbound showing better results than Wegovy, it is also cheaper. 

Interestingly, even the GLP-1 drugs sold for T2D – Novo’s Ozempic and Lilly’s Mounjaro – have also been prescribed by doctors off-label for weight loss. In other words, Lilly and Novo are the only competitors in a market with a potential global demand of nearly a billion people.

Pharma’s new market leaders

Since Novo Nordisk released semaglutide (Ozempic and Wegovy) it has become the largest pharmaceutical company in Europe and was at one point the largest European company by market value. In December 2023, Novo’s market cap exceeded Denmark’s GDP. Very impressive for a company that was in a crisis just six years ago.

The story is similar for Eli Lilly. The Prozac maker saw its profits decline significantly in the 2010s; its 2019 revenue was less than 2011’s. In the past five years, its stock has soared by over 442% and has become the most valuable pharmaceutical company in the world, replacing Johnson & Johnson (Novo is third).

The hype around weight loss drugs has been backed up by phenomenal sales figures.

In the first nine months of 2023, Novo Nordisk reported revenue of $23.6 billion and 52% of that was from Ozempic and Wegovy. Ozempic sales, in particular, have benefitted from strong buzz from Hollywood stars, which made the drug a household name.

Zepbound only got regulatory approval for use in the US and the UK in November of last year, but its sales figures are expected to exceed Wegovy’s.

JP Morgan forecasts that by 2030, the GLP-1 market will reach $100 billion. However, given Ozempic’s surge in popularity, the market is likely to surpass that and Eli Lilly will benefit from it greatly.

Some analysts have predicted Moujaro and Zepbound sales could reach $50 billion a year, while more modest estimates predict $27 billion in 2029. To put this in perspective, Lilly’s total revenue in 2022 of $28.5 billion is the highest in its history.

With this much money to be made, it is no surprise that competitors are lining up around the block.

The race for GLP-1 drugs

Pfizer, Merck, Amgen, Roche and AstraZeneca are also developing or acquiring GLP-1 drugs for obesity.

Pfizer just published its topline phase 2b results for its GLP-1R drug called Danuglipron. The once-daily oral tablet helped patients lose between 8% and 13% of their body weight in less than eight months. Pfizer expects to start phase 3 trials later this year.

Merck is developing a GLP-1 drug that has benefits beyond weight loss. Efinopegdutide is expected to target non-alcoholic steatohepatitis (NASH), which could be the first therapy of its kind.

Amgen has a GLP-1 drug called AMG-133 and another obesity drug called AMG-786. Both medications are still undergoing clinical trials, with updates expected in H1 2024.

Swiss drugmaker Roche entered the obesity market by acquiring Carmot Therapeutics for $2.7 billion. Carmot has a promising GLP-1/GIP receptor agonist called CT-388 that Roche believes is the best in the world and will be released in the 2030s.

AstraZeneca paid $2 billion for Chinese drugmaker Eccogene’s experimental GLP-1 daily oral pill. The pill is in Phase I clinical trials in the U.S.

Before the end of the year, there will likely be many more acquisitions for weight loss assets, and Novo and Lilly won’t be left out.

Lilly and Novo’s reign has just begun

As hard as the competition is trying to take their place, Novo and Lilly are trying even harder to keep it.

Novo Nordisk has been mopping up potential competitors including Embark Biotech (for 471 million euros) and Inversago Pharma ($1.1 billion). Eli Lilly is acquiring Versanis Bio for $1.93 billion. Each of their acquisitions is experimenting with novel approaches to weight loss that are not reliant on GLP-1 agonists.

Novo and Lilly have the cash to keep acquiring smaller companies while also improving their current pipeline and expanding their production capacities. This means they could stay ahead of the competition for a long time.

However, just like the Covid pandemic provided an opportunity for every pharmaceutical company, the obesity pandemic will do much more. But make no mistakes: this is Eli Lilly and Novo Nordisk’s world now and they intend to keep it that way.