Obesity drug challengers will struggle to break into plus-sized market

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The hunger for appetite-suppressing drugs remains unsatiated.

Weight loss treatments are tipped to rake in $80bn a year by 2030. Danish pioneer Novo Nordisk and rival Eli Lilly have made the running. But others are trying to find space in the field. Around a dozen companies are set to announce trial results for over 20 drugs this year. Most will struggle, unless they can clearly set themselves apart.

Challengers are largely following Novo Nordisk and Eli Lilly in mimicking key hormones, often the appetite-suppressing hormone GLP-1. Variations offer the chance to demonstrate fewer side-effects, easier methods of delivery or other health benefits in addition to weight loss.  

Take Danish biotech Zealand Pharma. It has a market value of just $3bn, less than 1 per cent that of Novo Nordisk. Like its compatriot, its share price has doubled over the past 14 months. It is trialling Survodutide, developed with Boehringer Ingelheim, along with an earlier-stage drug petrelintide. This mimics the amylin hormone, and may have fewer side-effects. If successful — a one-in-five chance — it could have $10bn peak sales, forecasts Jefferies.

California’s Carmot Therapeutics is working on GLP-1 and other analogues that promise to be relatively well-tolerated. Roche recently agreed to buy the company for up to $3bn. The plan is to combine its drugs with ones in the Swiss company’s pipeline, with a view to preserving muscle mass.

Improved delivery mechanisms are another differentiator. Amgen’s obesity therapy AMG 133 could require monthly, not weekly, injections. A pill formulation is attractive: in November AstraZeneca struck a licensing deal with China’s Eccogene for an oral once-a-day drug.

Many hopefuls will drop out. In December, Pfizer’s shares fell after side-effects forced it to cancel its twice-daily weight loss pill, though it is still pursuing a one-a-day version.

But the bigger question is how much ground the leaders are likely to cede. Pharma’s first movers can often prove resilient, despite rivals trying to muscle in. Merck’s blockbuster Keytruda managed this in cancer therapy with its checkpoint inhibitor.

The pioneers can use cash generated by blockbuster sales to extend their lead and stay abreast of new approaches. This month Novo Nordisk signed deals worth up to $1bn with US biotechs, following several acquisitions last year. One involved Massachusetts-based Omega Therapeutics, which aims to increase metabolic activity by modulating gene expression. 

Their expertise is reflected in an enviable pipeline. Novo’s next generation drug CagriSema is biopharma’s most valuable R&D project, with a net present value of $30bn, according to Evaluate. Citi thinks it and Eli Lilly will enjoy a structural duopoly well into the next decade.

Sheer market size is a spur to competition. But most of those playing catch-up will fail to gain much heft.