Rivals emerge to Ozempic and Zepbound—but with a lag
Summary
Big pharma challengers like Roche and Amgen could grab a slice of the obesity market.The two dominant players in the obesity market will eventually make way for a few more competitors. Just don’t expect the latecomers to be equals to Eli Lilly and Novo Nordisk.
There are dozens of promising biotech companies developing weight-loss drugs. Among the larger drug companies, Amgen and Roche stand out at the moment, and Wall Street is giving them some credit for it.
Amgen’s stock is up over 40% in the past 12 months largely thanks to its obesity program. Management has sounded very confident about its monthly injection, MariTide. If mid-stage study results, which are expected later this year, look as positive as the company is hinting they will be, Amgen could well be in a position to one day compete in the obesity market.
Roche’s entry is more recent. After releasing data from a pair of studies, the Swiss company is now also starting to be considered as a contender. Earlier this year, Roche completed the acquisition of Bay Area-based Carmot Therapeutics for up to $3.1 billion. That deal, which gave Roche three GLP-1 drugs under development, is now looking like a bargain. On Wednesday, Roche’s stock gained 5.6%, adding roughly $14 billion to its market value, after it reported that Carmot’s once-daily pill helped patients lose 7.3% of their body weight at the four-week mark.
While the data was from an early-stage study, it was nevertheless impressive, elevating Roche’s drug right to the top of the list of oral obesity drugs under development. Cross-trial comparisons are far from a perfect science, but the drug’s efficacy looked potentially better than the current leaders, Eli Lilly’s Orforglipron and Structure Therapeutics’ once-daily oral. Notably, Lilly and Novo went down sharply after Roche’s data came out, though the general stock market rotation away from this year’s big winners, including obesity plays, probably has added to the carnage. Structure, meanwhile, was down more than 14% since the data was released.
The enthusiasm over orals is understandable: Presently only injectable GLP-1s such as Wegovy and Zepbound are approved for use. Both drugs are facing manufacturing constraints. A small-molecule pill that is simpler to make and easy for patients to adhere to would represent a breakthrough, potentially expanding the market.
To be clear, Roche’s data was conducted on a relatively small number of patients. Efficacy or safety could look a lot different in a larger study. But pair it with positive data from Roche’s once-weekly GLP-1 injectable and investors can start seeing the makings of an obesity program.
That by no means suggests that Lilly or Novo are about to lose their lead in this market, though. Even if Roche, Amgen or another pharmaceutical company does make it to market sometime toward the end of this decade, none are likely to be leaders. While Roche is just getting started with its obesity pill, Eli Lilly’s Orforglipron is already undergoing a final phase of testing. Furthermore, Roche’s oral and injectable constitute what industry insiders refer to as me-too drugs—medications that are essentially slight variations of an existing one. Me-too drugs have their place in the market but they seldom rise to the top.
By the time any rivals make it to market, Lilly and Novo will have built a substantial lead. They will be far ahead in terms of market penetration and manufacturing capabilities, explains Sanjiv Talwar, portfolio manager at Alger. Furthermore, Lilly and Novo have a deeper pipeline and have conducted expensive and time-consuming clinical outcome studies examining their drugs’ effect on things such as heart disease and sleep apnea, he says. Given the leads built by the incumbents, Talwar predicts Novo and Lilly will hang on to something like 75% of the market with competitors divvying up the rest.
Eli Lilly and Novo Nordisk’s total reign over the diabetes-obesity market won’t last forever, that much should be clear by now. With over 100 obesity programs in various stages of development and a market that is likely to be worth over $100 billion in annual sales, there isn’t any way that Lilly and Novo can keep that all to themselves.
Write to David Wainer at david.wainer@wsj.com