Are Lilly and Novo Ready For What’s Next on a Wild Obesity Ride?

The wild ride that has been 2024 in the market for obesity care is not quite over yet. If you want to know exactly how wild this ride has been, take a moment to digest the results that the two leaders in obesity – Eli Lilly and Novo Nordisk – have posted.

The sales Lilly posted last week for tirzepatide totaled an impressive $3.4 billion in the third quarter of 2024. That number fell short of expectations for sales of $5.9 billion, so Lilly’s stock price sank. Then this week, Novo released numbers for their third quarter sales which exceeded expectations. Of course, Novo stock rose handsomely. But Lilly’s stock also bounced back because Novo’s results reassured investors that the market for obesity medicines is still vibrant.

New Drugs, New Competition

Before the year is out, phase 2 results for MariTide will be coming out from Amgen. The anticipation for this drug is high because it has a once-a-month dosing regimen that may offer advantages for both patients and manufacturing capacity. Simply cutting the number of injection pens will go a long way toward easing the supply constraints that have plagued obesity medicines.

Phase 3 results for CagriSema in obesity will also come in before the end of the year. Novo recently reaffirmed that they have high expectations for the effectiveness of this combination medicine. Lilly, too, has a full complement of new obesity medicines in development, including retatrutide, orforglipron, and bimagrumab in combination with semaglutide.

On top of all that, a wide range of very credible competitors have their own drugs in development. These include established pharmaceutical giants like Roche, Pfizer, Boehringer, and AstraZeneca, as well as smaller biotech firms like Zealand, Viking, and Structure.

Yes, projections of a market worth $200 billion attract competition.

Scale to Meet the Need

Another important aspect of this wild ride is the difficulty both Novo and Lilly have had in matching their scale of supply with the scale of the unmet medical need.

While the FDA approved drugs have been in a supply shortage almost continuously, compounded products have filled the some of the gap. Precisely how big that compounded supply has grown to be is the subject of intense speculation. Estimates vary widely.

Noom says that 90% of their telemedicine clients opt for the cheaper compounded product. Some observers say that compounded semaglutide accounts for 10-30% of the drug patients are using. Others suggest that their might be as many as 2 million patients taking compounded semaglutide.

Understandably, Lilly and Novo both argue that knock-offs of their obesity medicines should be kicked out of the market. They emphasize patient safety, but clearly they have a business motive in taking this position, too.

Great Unmet Need

In sum, it is clear that the unmet need is great and that competition in many forms will come to meet it. This is a wild ride that has only barely started.

Click here, here, and here for further perspective.

Two Riders and Reclining Figure, painting by Wassily Kandinsky / WikiArt

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November 9, 2024