The demand for drug therapies for obesity is on the rise. New drugs with efficacy rivaling bariatric surgery, with only minor tolerability issues, have replaced older drugs burdened with significant cardiovascular side effects and mediocre efficacy. The approval of Novo Nordisks’ NVO GLP-1 agonist Wegovy in 2021 led to increased demand for the active ingredient semaglutide in various forms, including the diabetes drug Ozempic. Mounjaro, the Eli Lillys LLY-approved diabetes drug, is poised to generate even stronger weight-loss results and will launch as an obesity treatment around the end of 2023. We think Novo and Lilly will continue to lead the market of obesity over the next 10 years, with incremental innovation in this rapidly expanding market that will underpin their broad economic moats. We expect new therapies launched in 2026 and beyond by companies like Amgen AMGN and Pfizer PFE to grow to about a quarter of the market by 2032.
We expect the global average price of GLP-1 therapy for obesity to rise to approximately $5,400 annually with the launch of Novos and Lillys obesity treatments, then gradually decline starting in 2025 with the launch of competitors, falling to about $2,800 by 2032. We predict 21 million people globally could take GLP-1-based therapy for obesity by 2032, creating the potential for a $60 billion market. Semaglutide in various dosages has been on the market for several years and we believe significant side effects are unlikely. However, newer therapies such as Mounjaro or other combination regimens could have side effects once they are approved and used in larger populations, creating an attorneys’ fees risk which is factored into our forecasts.
We see a path to $60 billion in global obesity sales
We believe valuations for leaders Novo and Lilly remain high, with investors assuming the same significant growth in demand and volume as we anticipated, but leaving little room for new entrants. As more companies enter the market, we expect affordability to improve, increasing demand and further propelling the market towards our theoretical potential market of approximately $60 billion by 2032, across all companies. We believe new entrants, including Pfizer and Amgen, could gain about a quarter of the global market over 10 years.
We see several catalysts leading to this potential $60 billion market, starting with already available data for the new obesity drugs Wegovy and Mounjaro and followed by additional data from cardiovascular studies and potential competitors.
GLP-1 therapies go beyond diabetes, led by obesity launches
The obesity market was steadily growing as demand for Novo Nordisk’s older GLP-1 therapy Saxenda increased, but Wegovy’s approval of semaglutide marked the beginning of a new level of efficacy in obesity. obesity that was enough to arouse high demand. While Novo has struggled with supply constraints, Wegovy sales are starting to take off in 2023, and Lillys GLP-1/GIP combination therapy Mounjaro, already approved for diabetes, is expected to launch in obesity later this year. year or early 2024.
Demand for GLP-1 therapeutics in diabetes has already created an estimated $20 billion global market, following years of double-digit demand growth as doctors and patients become more comfortable with the long-term safety of these medicines and as the benefits beyond blood sugar control become more apparent with newer therapies.
GLP-1 market growth has generally been split between two once-a-week diabetes injectables, Novos Ozempic and Lillys Trulicity, although Wegovy’s launch has led to accelerating growth in the obesity market.
We expect GLP-1-based sales in the diabetes and obesity industry at Novo Nordisk, Eli Lilly, Pfizer and Amgen to exceed $90 billion by 2030, before Novos’ US patent for semaglutide expires in 2032. If clinical development goes smoothly for Amgens and Pfizers mid-stage obesity drug candidates, we would expect them to gain more significant market share.
Wegovy leads the obesity market, but competition is increasing
With the launch of long-acting GLP-1 Wegovy in 2021 and the pending launch of GLP-1/GIP co-agonist Mounjaro, efficacy and convenience have risen to a level that is attracting significant numbers of obese patients. The GLP-1 pathway is central to both drugs and has already made this class a key part of diabetes management (the active ingredient in Wegovysemaglutide is the same as the diabetes medicines Ozempic and Rybelsus). Mounjaro seems slightly more effective than Wegovy, perhaps due to the inclusion of the GIP pathway in its mechanism of action. However, Wegovy’s first-market status, even with significant supply disruptions delaying a full rollout, should help Novo Nordisk maintain similar market share.
In addition to Wegovy and Mounjaro, Novo Nordisk and Eli Lilly have strong drug pipelines looking to achieve even greater weight loss and potentially more convenient oral dosing than injections.
Novos’ obesity pipeline focuses on maximizing the potential of semaglutides as a single agent and combining the drug with analogs of amylin, another class of appetite-suppressing drugs. Phase 3 data for a high-dose oral version of semaglutide in May demonstrated similar efficacy to Wegovy, and Novo plans to file for approval in 2023. However, we believe the program most critical to growth potential in the long Novos term is cagrisema, which combines semaglutide with the amylin analogue cagrilintide.
At Eli Lilly, development focuses on further cementing Mounjaros’ benefits in obesity, including a head-to-head study against Wegovy with data expected in early 2025 (although we expect data for a high-dose version of Wegovy will be available within this period, making this comparison potentially obsolete). In addition to Mounjaro, Lilly has two key strategies: defending against Novos’ potential to launch high-dose oral semaglutide in obesity with its own oral GLP-1, orforglipron (in phase 3), and testing a new GLP-1/glucagon /GIP injectable tri-agonist called retatrutide (also entered Phase 3 this year).
We think other players’ obesity drugs could start rolling out as early as 2026, ranging from potential efficacy for me as well to new combined mechanisms of action. Pfizer and Amgen stand out as the two big biopharmaceutical companies hoping to enter the market behind Novo and Lilly. Pfizer is still deciding between two oral GLP-1 therapies, both expected to have Phase 2 data in late 2023 or early 2024, allowing Phase 3 development for a program to begin by the end of 2024.
We believe Amgens’ compound has the potential for greater differentiation than Pfizer’s orals, as its drug is a combination of GLP-1 agonism and GIP antagonism. The long-acting nature (Amgen is testing monthly and even quarterly dosing) and potential leading efficacy could make it a competitive drug, although Phase 2 trials are still ongoing, with data expected in 2024 and a launch not yet announced. possible until at least 2026.
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