In the fiercely competitive market of weight loss therapy, giants Eli Lilly and Novo Nordisk stand tall. With their blockbuster weight loss drugs Zepbound (tirzepatide) and Wegovy (tirzepatide), these pharmaceutical powerhouses are set to reign supreme, as predicted by two notable Street analysts.
Market Dominance
Managing director at J.P. Morgan Asset Management, Holly Morris, asserts that the sheer size and early market entry of Eli Lilly and Novo Nordisk provide them with an edge in controlling the weight loss therapy market. This domination, she suggests, is akin to a fortress protected by years of research and development investments, creating a formidable barrier for potential competitors.
During a panel discussion at the Seeking Alpha Investing Summit, Morris drew parallels with the surgical robotics sector, highlighting how despite new players entering the arena, a monopolistic environment persists. The intellectual capital and robust supply chain infrastructure established by Lilly and Novo make them behemoths that are hard to displace.
Challenges for New Entrants
Cantor Fitzgerald’s managing director, Louise Chen, acknowledges the formidable position of Lilly and Novo in the market. She emphasizes that for newer companies to carve a niche, they must offer unique value propositions such as orally administered medications, less frequent dosages, muscle mass preservation, or combination products.
Chen also notes the arduous path for smaller firms to commercialize their products independently. She suggests that acquisition may be the key for these entities to thrive in the competitive landscape, indicating a potential trend of consolidation in the industry.
Projected Growth
Chen’s projections for GLP-1 drugs, including Lilly’s Mounjaro and Novo’s Ozempic, paint a lucrative picture. The market is expected to reach $45 billion this year and soar to $100 billion by 2025, propelled by advancements that enhance supply chain efficiencies.
Both Lilly and Novo continue to expand their portfolios, with Lilly venturing into oral GLP-1 medications and Novo exploring innovative combinations like CagriSema and monlunabant. The market also sees promising prospects from mid-stage candidates like VK2735, GSBR-1290, pemvidutide, petrelintide, danuglipron, and AMG133.
As Roche explores early-stage candidates CT-996 and CT-388, the arena of weight loss therapy brims with innovation. Despite the quest for more potent weight loss treatments, Morris highlights that efficacy alone may not be the deciding factor in market dominance.
“We’re getting to these levels of weight loss now that are very dramatic, like 25%+, and not everybody needs that,” Morris elucidates. She speculates that the market will segment based on varied consumer needs rather than a race for the most effective drug.