Obesity drugs are a modern day gold rush for drugmakers. Eli Lilly , valued at $347 billion, is close behind $207 billion Novo Nordisk in releasing a weight loss drug, in a market expected to be worth $50 billion by 2030. But the duo’s success is enticing rivals and smaller players. That may trigger a wave of dealmaking, and lower returns.
. It helps that the technology behind GLP-1s is already used in diabetes care, making it easier for new entrants to muscle in. Greater competition will drive down prices.
The question is how many people will take the drugs, and at what price. Cash-strapped governments may prioritise diseases like cancer over preventative treatments like obesity medication. For the market to reach $50 billion in annual sales, over 3 million people would need to jab themselves with GLP-1s, assuming an annual cost of around $16,000, Wegovy’s list price. That’s nearly 4% of America’s obese population. But a plausible 50% price cut would lower annual sales to $25 billion. Share that between six drugmakers, and each one would reap only a little more than $4 billion. Without an ever expanding number of patients, investors’ obesity hopes may need trimming.
Eli Lilly’s Mounjaro, which is used to treat diabetes and obesity, is expected to deliver $21 billion of revenue by 2030, according to data provider Visible Alpha. Clinical data has shown patients can lose more than 20% of their body weight on the treatment.Editing by Neil Unmack and Oliver TaslicOpinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
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