Novo Nordisk v Eli Lilly: Return of the Weight Loss Wars

In recent months, manufacturers of weight loss medicines have gone on an accident diet. At the end of July, Novo Nordisk, the Danish firm that gave the World Ozempic, lost a quarter of its market value on a day after reducing sales and profit forecasts. The following week, the share price of Eli Lilly, its biggest competitor, fell 14%, the US pharmaceutical giant’s largest one -day loss in 25 years. In the 63 weeks since their joint levy reached a peak-a period in which people injected themselves with the slim pins of the firms can expect to lose 15-20% of their kilogram-the duo has cast about 35% or about half a billion of their dollars. Novo Nordisk, the lighter of the two, also dumped his boss. His successor, the head of his non-American company, took over last month. For the Danish firm, the radiation is the result of sluggish sales in America, the world’s largest healthcare market (and a place with many people hoping to lose a few pounds). Ozempic, which belongs to a class of appetite suppressant medicine known as GLP-1 Agonists and has been prescribed for diabetes since 2017, and Wegovy, a version specifically aimed at weight loss and has been available since 2021, was the first such block buses approved for use by America’s food and drug administration (FDA). But they fell out of favor with doctors and patients at the moment Eli Lilly introduced his more effective GLP-1 concoctions, Mounjaro and Zepbound, in 2022 and 2023. As for Eli Lilly, the recent, decent financial results were overshadowed by those of a clinical trial showing that the new pill had less slimming force than hoped. The two heavyweights with weight loss no longer have the ring for themselves. Initial problems with production build -up has led to shortages, especially from Wegovy. In times of scarcity, the FDA allows ‘cooperating’ pharmacies to copy brand medicine. Novo Nordisk says these compilers, who often acquire active ingredients from China and charge much lower prices, make up 30% of all prescriptions against obesity in America. Other contenders are muscle. On September 22, Pfizer, another US giant, said it would pay $ 7.3 billion for Metera, a recently listed biotech firm working on the next generation of weight loss treatments. On the same day, Roche, a major Swiss drug manufacturer, said he will start his own candidate next year at the late stage. Earlier this year, it signed a $ 5.3 billion agreement with Zealand to develop and sell the smaller Danish firm’s promising medicine. In June, Innovent, a Chinese company, conquered China’s drug regulator approval for his own new GLP-1 injection to treat obesity. On September 19, he said that the formulation of the anti-diabetes also had the thumb. Should the weight loss under breakers weaken more lean years? Not necessarily. Because although the first time has not guaranteed success for Novo Nordisk, it can still pay a good price for it as well as for its American arch -enemy. The two champions’ first advantage over all entrants is their generous production capacity. Novo Nordisk has especially built manufacturing muscle. Over the past four years, its cumulative capital expenditure has exceeded $ 28 billion. Capex eats 18% of turnover, 15% three years ago. In December, his parent, Novo Holdings, completed the $ 16.5 billion purchase from Catalent, an US manufacturer, to increase capacity in America – handy as President Donald Trump prepares to slap his beloved tariffs on imported pharmaceutical products. In February, the FDA finally took away from its deficit list. Eli Lilly, who has spent $ 21 billion for the past four years, is the only rival that matches near this capital flush, which has spent the past four years (although his wider portfolio of drugs, not all on GLP-1 production). This is equivalent to about 11% of sales, twice Roche’s share and two and a half times Pfizer’s. The one-two punch rates and healthier offer are likely to strike the compilers’ competition. Novo Nordisk has also filed 130 lawsuits to stop the Copycats in America and has already won 44, according to a score by Bernstein, a broker. The FDA seems to have to lay down the compilers over their ties with Chinese factories that do not have the US regulator’s stamp of approval. Since 80% of the weight loss preparations sold by the compound pharmacies are semaglutide, the patented molecule of Novo Nordisk, this is a large piece of the 30% market share. The second reason for optimism about the incumbents is their increasing product pipelines. On September 17, Novo Nordisk reported that a tablet version of Wegovy, which arises daily rather than injecting patients, is comparable to the injectable semaglutide. Eli Lilly’s pill is perhaps less powerful, but it is not necessary to fasten half an hour after it takes it, and because it relies on a simpler and smaller molecule, it is cheaper to make. Both firms expect the FDA’s blessing for their pills within months. The day before his pill, Novo Nordisk said injections from Cagrilintide, a molecule that works similarly to GLP-1, have led to a somewhat smaller average weight loss, but with much less side effects-an attractive trade-in for people who have to lose less kilo. Meanwhile, the firm’s cocktail of Cagrilintide and Semaglutide, known as Cagri Sema, shows a higher potential for the weakening of the kilo. Likewise, the experimental means of Eli Lilly, Retatrutide. Fat chances are very important that these products go beyond competitive offers from other manufacturers, which are unlikely to be the best way in the best of the clinical and regulatory barriers before 2028. This implies that most of the $ 100 billion, giving or taking, that by 2030 the world must spend on obesity medicine annually in the pockets of Novo Nordisk and Eli Lilly. After that, things can become leaner for the pioneers. Until then, the pie is them to fight over. Correction (September 26): In an earlier version of the article, we suggested that users of the Wegovy pill should fasten half an hour before taking it. In fact, they should not eat half an hour after taking it. Subscribers to The Economist can subscribe to our opinion newsletter, which brings together the best of our leaders, columns, gas essays and reader correspondence.