During the Industrial Revolution, a revolution in industry would never be matched. Today’s technological advances have given rise to a sedentary lifestyle, coupled with a plethora of cheap, readily available food, fueling a pandemic of obesity. Recent CDC data paints a bleak picture – 1 in 5 adults in the US and territories could be classified as obese. Shockingly, 22 states reported obesity rates above 35% in 2022.
The health concerns associated with obesity position the global weight loss market as a ripe field for exponential growth. According to recent Dimension Market Research conducted in January, investors should brace for a Compounded Annual Growth Rate (CAGR) of 10.3%, projecting an increase from $165.5 billion in 2023 to nearly $399.3 billion by 2032.
New advancements in pharmaceuticals could catalyze this growth. Now, the question lingers – which pharma giants are best positioned to capitalize on the burgeoning weight loss market?
Pharma Powerhouses Eye the Weight Loss Market
Following a tumultuous period characterized by contentious vaccine rollouts, Pfizer Inc (NYSE:) faced speculation of impending record fines. Legal battles, including suits from Texas and Kansas, alleged false claims and concealing evidence of vaccine-related adverse events against the pharma behemoth. Despite these challenges, widespread governmental endorsement of the rollouts is likely to shield Pfizer from severe repercussions.
The lingering narrative cast a shadow on PFE stock performance, with dwindling demand for vaccines taking a toll. After hitting an all-time high of $55 in December 2021, PFE shares witnessed a 52-week average of $29.96, aligning with the current valuation of $28.66 per share.
Pfizer’s diversified pharmaceutical portfolio promises a stable revenue stream. The company’s Q1 ’24 earnings reveal an anticipated revenue range of $58.5 to $61.5 billion for the full-year 2024, in line with prior estimates. Notably, Pfizer surpassed expectations for the quarter, generating $14.88 billion in revenue, showcasing a 19% YoY decrease but outperforming the consensus forecast of $14.01 billion.
Pfizer shareholders are now eyeing a potential windfall from danuglipron, the firm’s novel weight loss treatment in the form of a once-daily pill. Optimizing studies scheduled for the latter half of 2024 will determine the appropriate dosages. With a substantial investment of $2.5 billion in internal Research and Development (R&D) in Q1 alone, Pfizer’s Chief Scientific Officer, Dr. Mikael Dolsten, touts a robust pipeline featuring three clinical and several preclinical candidates. The frequent dosage regimen hints at a lucrative revenue stream augmentation for Pfizer.
Market Dominance in Weight Loss Sector
Novo Nordisk A/S (NYSE:) swiftly captured the obesity market with its star products, Wegovy and Ozempic. The firm’s Q1 earnings showcase a stellar 24% sales surge powered by these GLP-1 drugs, enabling Novo Nordisk to stake a claim with a 34% share in the obesity market and a commanding 55.3% share in the GLP-1 market.
Wegovy’s sales catapulted from DKK 4.5 billion to DKK 9.38 billion year-on-year, while Ozempic for diabetes mirrored the success with DKK 4.3 billion in revenue, indicating a 35% YoY increase. Both offerings rely on semaglutide as an active ingredient, propelling net profits to a 28% YoY upsurge, landing at DKK 25.4 billion, approximately $3.65 billion, positioning Novo Nordisk as Europe’s most esteemed company.
Current market observations reflect the robust performance, with NVO stock priced at $142.37 per share, surpassing the 52-week average of $111.72 and edging near the all-time peak of $146.91 recorded in June. The share value resonates with Nasdaq’s 12-month average price target at $143.79, with a ceiling projected at $166 per share, contingent upon competitive dynamics and forthcoming drug rollouts.
Innovative Solutions in the Weight Loss Arena
Amid this competitive landscape, Eli Lilly and Company (NYSE:), headquartered in Indianapolis, brought its weight loss prowess to the forefront with Trulicity (dulaglutide). This GLP-1 receptor agonist, launched in the US in November 2014, garnered FDA approval for additional doses targeting type 2 diabetes treatment in September 2020.
Eli Lilly’s legacy in successful drug rollouts, epitomized by iconic products like Prozac for depression and Iletin as the pioneering insulin formulation in the 1920s, sets a solid foundation for advancing treatments in obesity and diabetes. The firm now hinges on Mounjaro, Zepbound, and Jardiance for sustained revenue upsurge, with these offerings primarily fueling a 26% sales escalation to $8.76 billion in Q1 earnings, culminating in a net income of $2.2 billion.
A comparative assessment between Eli Lilly and Novo Nordisk unveils a promising narrative for Eli Lilly’s tirzepatide. In a study spanning May 2022 to September 2023, tirzepatide exhibited a compelling 15.3% average weight loss, outshining Novo Nordisk’s semaglutide, which delivered an 8.3% yearly weight reduction. This pivotal outcome steered tirzepatide’s approval in China in May.
As the industry navigates patent janctures, Eli Lilly’s dominion appears fortified by the extended patent on tirzepatide in China until January 2036. LLY stock, presently scaling an all-time zenith of $943, significantly outstrips its 52-week average of $668, signaling investor optimism akin to the Prozac era, where a drug embeds itself in popular medical lexicon.
Unlocking the potential of the weight loss market beckons forth a new epoch in the pharmaceutical realm.
