America's Weight Loss Race

Pharmaceutical companies are in a race to keep the world slimmer.

According to Grand View Research, the global weight management market was $142.5B in 2022 and will continue to grow at a 10% CAGR from 2023 to 2030.

Most recently, weight-loss drugs have gained immense popularity among individuals desperate to shed weight and investors eyeing the potential profits of a medication that can address the widespread issue of obesity in America.

While the FDA currently approves these drugs for the treatment of diabetes, they have gained notoriety for their effectiveness in weight loss – particularly due to celebrity endorsement. Still, the FDA has warned against off-label use.

The U.S. Weight Management Market, Source: Grand View Research

European regulators are also on alert after the European Medicines Agency (EMA) received reports of multiple cases of suicidal thoughts and self-harm among users. Product leaflets don’t list these issues as possible side effects.

“The case reports included two cases of suicidal thoughts - one following the use of Saxenda and one after Ozempic,” stated an EMA official.

The drugs in question belong to a class known as glucagon-like peptide 1 (GLP-1) drugs, which mimic a hormone naturally produced by the body to suppress appetite and slow down stomach emptying. Currently, the most popular weight-loss drugs on the market, including Ozempic and Wegovy, are injectable. However, there is a growing demand for an oral version.

Pills are easier to manufacture, potentially alleviating the supply shortages already seen with injectables. Moreover, pills are cheaper, although pricing and insurance eligibility is yet to be determined.

Novo Nordisk ($NOVO-B), the company behind Ozempic and Wegovy, is conducting late-stage trials on an oral candidate using Semaglutide - the same active ingredient in their injectable drugs. Patented in 2012, the company has a monopoly on its production until 2032. Therefore, it has an incentive to charge as much as they can.

There are concerns among pharmaceuticals, however, that pills will be less effective due to their decreased bioavailability.

“If you take it with food or drink, it just won’t get absorbed efficiently,” stated Dr. Eduardo Grunvald of UC San Diego’s Center for Advanced Weight Management.

He added that pills from Eli Lilly ($LLY) and Pfizer are non-peptide GLP-1s, which absorb more easily and don’t require dietary restrictions.

Pfizer ($PFE) recently announced that it would advance an oral version of a drug candidate similar to Ozempic while abandoning another candidate due to concerns over liver damage. This move comes as Pfizer faces increasing competition from rivals and investor worries. Despite beating earnings forecasts, the stock has lost 30% of its value year-to-date, owing to poor guidance for the rest of the year.

Pfizer needs a turnaround, and its decision to advance an oral weight-loss pill candidate, Danuglipron, is unsurprising. However, it requires two daily doses, while the competition needs only one. Despite analysts’ doubts, Pfizer remains optimistic, projecting $10B in annual sales for the treatment of obesity and Type 2 diabetes, while working on a version requiring only a single daily dosage.

Meanwhile, Eli Lilly, the maker of Mounjaro, has also entered the race with promising results from its oral GLP-1 drug candidate, Retatrutide. In a study, Retatrutide patients lost 24% of their body weight over 48 weeks.

The results surpassed even the most effective drugs currently on the market. Its other weight-loss pill candidate, Orforglipron, also achieved strong results, demonstrating weight loss of up to 14.7% after 36 weeks in phase two clinical trial.

“These are revolutionary drugs,” said Michael Manolakis, vice president of pharmacy consulting at Aon.

“We’re experiencing something here that is very, very different, very exciting from a healthcare perspective, and very expensive,” Manolakis added, indicating that the low-income people, who are most heavily affected by obesity, might still need to wait for an affordable solution to the obesity problem.