Danish pharmaceutical giant Novo Nordisk, renowned for its diabetes and weight loss drugs Ozempic and Wegovy, has experienced a significant share price drop of around 19% this month. This decline follows its market peak in June, driven by increasing competition from Eli Lilly, a key player in the same space.
Eli Lilly has gained substantial momentum with its rival drugs, Mounjaro and Zepbound, challenging Novo Nordisk’s market dominance. Despite this, Novo Nordisk remains a market leader due to its first-mover advantage, research and development strength, and manufacturing capabilities, according to Denker Capital equity analyst Lizelle van Rooyen.
Novo Nordisk is developing an oral weight-loss drug, Monlunabant. Although the drug has demonstrated statistically significant weight loss in trials, mild neuropsychiatric side effects, such as anxiety and sleep disturbances, have raised concerns. Another drug in development, Amycretin, is expected to show best-in-class oral efficacy, though its scalability remains uncertain.
Rising demand for obesity drugs amid growing market
According to the IQVIA Institute for Human Data Science’s Global Use of Medicines Outlook 2024 report, the uptake of obesity drugs, particularly in developed markets, has been rapid. Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound have both gained approval in the US as treatments for obesity, a market that could grow to $100 billion by 2030.
This market expansion, however, depends on whether health insurance providers are willing to cover these expensive drugs for patients with lower body mass indices but other health conditions, such as high blood pressure.
Barriers to wider adoption of GLP-1 drugs
The cost of GLP-1 drugs remains a barrier to their wider adoption. Around 50% of US employer insurance plans cover these drugs to some extent, but with prices around $1,000 per month, insurance coverage is a critical factor in determining treatment strategies.
Van Rooyen emphasised that the size of the obesity treatment market will be influenced by insurance coverage, pricing, treatment expansion, and drug efficacy. Novo Nordisk and Eli Lilly are expected to dominate. Other major pharmaceutical companies, such as Roche, Pfizer, Amgen, and AstraZeneca, are preparing to enter the market by the decade’s end.
Bronwyn Williams, trend translator at Flux Trends, notes that breakthrough drugs like Ozempic will likely have ripple effects across multiple sectors of the global economy, from food and beverage companies to fashion and healthcare. Data suggests that GLP-1 drugs may be changing consumer behaviour, with significant reductions in calorie consumption and increased health-conscious lifestyle changes.
The broader impact of obesity drugs
A Morgan Stanley report predicts a 1.6% reduction in annual calorie consumption in the US by 2035 due to GLP-1 uptake. This shift is particularly evident in the declining consumption of snacks, sugary drinks, and alcohol among GLP-1 users.
The rise of GLP-1 drugs could also reduce the demand for weight-loss surgeries while promoting healthier populations and longer lifespans. Although the costs associated with broader health insurance coverage of GLP-1 drugs will be significant, these costs could be offset by a reduction in other healthcare expenses, such as those related to cardiovascular diseases and diabetes complications.