Several pharmaceutical companies are racing to develop obesity drugs and tap into a surge in consumer demand for the extremely profitable drugs. Sales of Eli Lilly’s (LLY) diabetes drug Mounjaro, just approved by the U.S. Food and Drug Administration (FDA) for obesity in the U.S., hit $1.41 billion in Q3, up more than 650% from a year ago. Also, sales from Novo Nordisk A/S’s (NOV) weight-loss drug Wegovy reached 9.6 billion kroner ($1.37 billion) in Q3, up 734% from a year ago. Revenue from both companies jumped 40% in Q3.
The pharmaceutical companies are struggling to keep up with the soaring demand for the new obesity drugs. The Mounjaro and Wegovy drugs were in short supply in the U.S. last year, and Novo Nordisk said it would continue to limit certain doses for its drug through next year. Eli Lilly’s CEO Ashkenazi noted recently that the supply situation for Mounjaro will continue to be an issue for “quite some time,” and that is before it received FDA approval as a weight-loss treatment.
Drugs like Eli Lilly’s Mounjaro (now called Zepbound after FDA approval) and Novo Nordisk’s Wegovy are gold mines that have boosted the companies’ revenues and propelled their stocks to dizzying valuations. The weight-loss craze has lured other drugmakers into the field. Pfizer (PFE) and AstraZeneca (AZN) are looking into oral weight-loss medicines to make inroads into a market projected to reach $100 billion within seven years.
Drug companies are developing oral medicines for weight loss instead of injections. AstraZeneca CEO Soriot said that at least 75% of patients will prefer pills over shots, and he foresees a pill that will “democratize” weight loss, making it available to more people in low-income countries. Pfizer CEO Bourla said, “Oral medications will play a very significant role because not everybody likes injections.”
The key to a sustainable demand for these new obesity drugs will be if drugmakers can make them affordable to the masses. AstraZeneca CEO Soriot said in contrast to the high costs of the current crop of weight-loss drugs, he anticipates cheaper products in the future, saying, “The cost of goods we believe is lower.” Also, Weill Cornell Medicine, who has advised big drugmakers on their efforts in the field, said the current generation of obesity drugs is only the beginning and “there are ten plus new drugs coming in the next five to ten years. This is not the grand finale.”
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
