From Farsighted to Flailing as the Obesity Market Advances
This is a perilous and exciting time for investing in obesity innovation as the market for treating this disease advances dramatically.
On the side of excitement, we note that the David Wainer in the Wall Street Journal predicts that “obesity drugs are about to go mass market.”
Perilous for Novo
On the side of peril, we watch continued flailing by the once farsighted creator and leader of this flourishing space for innovation, Novo Nordisk. A fresh illustration comes from the company’s futile battle with Pfizer to take control of Metsera, an upstart biotech with a promising portfolio of obesity medicines. When it became clear that Novo had lost that bid, investors heaved a sigh of relief and took the Novo Nordisk stock price up seven percent yesterday.
Apparently, the Novo bid for Metsera was not inspiring to investors.
Cautious Planning
How did Novo Nordisk go from farsighted to flailing?
In our view, it was hesitance to follow through on bold strategy to build the obesity market. As bold as their research and commitment to obesity was, the commercial execution was tepid. Bloomberg describes a key mistake:
“Novo vastly underestimated the demand for weight-loss drugs. Its production sites initially struggled to keep up with consumer appetite, resulting in supply delays.”
Shortages dragged on for years after launching in obesity. This allowed less expensive compounded versions of semaglutide to gain a solid – and now seemingly unshakeable – foothold in the marketplace.
As this was playing out, Novo seemed complacent in comparison to their new competitor, Eli Lilly and Company. While Lilly’s CEO described having a supply shortage as an “all hands on deck” emergency, the Novo CEO could not say when they would get out of shortage. Thus, Novo tolerated a short supply of semaglutide for nearly three years. Lilly’s shortage of tirzepatide lasted only a year.
Was Novo content because they were skimming profits from a lucrative market at a very high price? Or did they rationalize a slow response as prudent conduct of business operations? Move fast and you might break things is a rationalization for caution.
Whatever the reason, Novo Nordisk has lost some of its shine a a visionary leader in obesity.
Tremendous Opportunity
The truth is that the tremendous opportunity to meet the full need for advanced obesity medicines has to date barely been tapped. Novo started it with Saxenda and then Wegovy. Now Lilly has taken the lead with a better offering (tirzepatide) and a portfolio brimming with further improvements. We count three drugs (orforglipron, retatrutide, and eloralintide) at advanced stages of development with potential to be blockbusters on their own.
In the WSJ, Wainer says that the market expansion is starting now with help from the deal President Trump announced last week:
“The obesity market is shifting from the Upper East Side, where the drugs are wildly popular, to Main Street America. Bernstein estimates that the Medicare deal opens up a market of about 30 million people, which represents an opportunity of about $27 billion in annual sales.”
Lilly might be bold enough to consolidate its strong leadership position. Novo might muster the tenacity to fight its way back into the lead. If those companies falter, a literal bevy of other companies (more than 60) are nipping at their heels. Hundreds of new medicines are in various stages of development for obesity.
This story is only just beginning.
Click here for free access to Wainer’s piece in the WSJ, here and here for an overview of drugs in development. For further perspective, click here.
Icarus, illustration by Henri Matisse / WikiArt
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November 12, 2025
