In the $600 billion weight loss drug market, which pharmaceutical company can share a cup of soup?

In the latest US stock reporting season, “GLP-1 Diet Pills” has beentranscendsArtificial intelligence (AI) is a hot topic for analysts and executives. Some fund managers believe that GLP-1 slimming drugs could be the AI moment in the pharmaceutical world, so many pharmaceutical companies are actively developing similar weight loss drugs.

It seems that the market for weight loss drugs may be about to face a fierce competition that will last for decades. So, what is the market potential of this industry? Which companies might benefit? What competitive advantages do the two pharmaceutical giants have, respectively, Norwood and Lee? At the same time, what potential risks need to be considered?

In the next article, we will explain these issues in detail for investors to better understand the market opportunities and potential risks in the weight loss drug industry so that they can make informed investment decisions.

01 What is GLP-1 Weight Loss Pills?

GLP-1 weight loss drug, full name GLP-1 “glucagon-like peptide-1 receptor promoter”. Initially, GLP-1 was a hormone secreted by the gastrointestinal tract that was primarily used to treat diabetes.

However, over time, researchers have found that this hormone can suppress appetite, thereby controlling weight. As a result, major pharmaceutical companies began exploring the potential of GLP-1 as an anti-obesity and weight-management drug.

Danish pharmaceutical company Novo Nordisk, US stock code: NVO, was the first company to apply GLP-1-like drugs in the field of weight loss. As early as 2010, the company launched a GLP-1 drug called Liraglutide (brand name Victoza), which was initially used to treat diabetes, but later improved upon its weight loss effects and launched a weight loss drug called Saxenda.

In 2017, Norwood again launched Semaglutide (brand name Ozempic), a new product for the treatment of diabetes, and in mid-2021 received approval for a high-dose version, launching a weight loss drug branded as Wegovy. Due to its excellent weight loss effects, the drug began to be highly recommended on social media platforms such as TikTok and received the recommendation of the world's first FOMSK, so GLP-1 diet pills gradually went red.

US pharmaceutical company Eli Lilly And Co, US stock code: LLY, has also launched some GLP-1 products. In 2014, they launched a diabetes drug called Dulaglutide (brand name Trulicity), which became one of the company's best-selling products.

In May 2022, Lai launched its new product Tirzepatide (brand name: Mounjaro). Although the drug is currently only approved by the Food and Drug Administration (FDA) for use in adults with type 2 diabetes, the study shows that its weight loss effect is 50% better than Bino and Nord's Ozempic and Wegovy, so it is also worth noting.

The following table lists currently approved GLP-1 drugs on the market, including their prices and frequency of injections. It is worth noting that only Wegovy and Saxenda from Norwood are currently on the market for wholesale GLP-1 drugs for weight loss.

Data Source:Healthline

02 Weight Loss Pills Market Outlook

Obesity is a major cause of many serious diseases. pursuantWorld Health OrganizationIt is estimated that more than 7.5 billion people worldwide suffer from obesity, which accounts for a 5% mortality rate.

With the advent of GLP-1 weight loss drugs, the need to treat obesity is increasing.MorningstarAnalysts predict that the global market size for GLP-1 weight loss drugs could reach $600 billion in the next 10 years.

They expect the global average price of GLP-1 therapy for obesity to rise to about $5,400 per year as the company launches its obesity treatment drug, and then gradually decline from 2025 to about $2,800 by 2032 as competitive treatments roll out. According to their prediction, by 2032, 2 million people worldwide will be receiving GLP-1 therapy to treat obesity problems.

Morgan StanleyThere are higher expectations for the prospects of the weight loss drug market. They forecast that the global obesity market could grow from $24 billion in 2022 to $70 billion in 2030, 43% higher than their previous estimate of $540 billion.

03 What medicines can be divided into a cup of soup?

Currently, Norwood and Lee are two of the leading companies in the weight loss drug market.

However,MorningstarIn addition to these two companies, two biopharmaceutical giants, Pfizer Inc., Pfizer Inc., PFE and Amgen, Inc., are expected to stand out in this area, analysts believe.

They expect Pfizer and Ensign's GLP-1 weight loss therapy market share to reach 3% and 4% respectively by 2032, but still far below Norwood's 36% and Lloyd's 40%.

Currently, Pfizer is still choosing between two oral GLP-1 therapies, both of which are planned to receive Phase 2 clinical trial data in late 2023 or early 2024 in order to begin Phase 3 clinical development by the end of 2024.

Anjin's GLP-1 therapy has more differentiating potential than Pfizer's oral medications because its drugs are a combination of GLP-1 stimulants and GIP antagonists. This could make it a competitive drug, although 2 phase clinical trials are currently underway, with relevant data expected in 2024, and market entry may wait until at least 2026.

04 Norwich City vs Liverpool

Many investors are curious, which of the two leading companies, Noah and Nord and Lee, have more potential? We can compare from a number of aspects such as product, profitability, growth and valuation:

From a product perspective,The Motley Fool Analysts believe that Nowe Nord's advantage is that it already has several GLP-1 drugs that have received weight loss drug approval and steady growth in the market. However, the downside is that their production capacity is currently unable to meet market demands. In contrast, Gifu's new product Mounjaro performs better in terms of medicinal efficacy, according to clinical trial data from last year, Mounjaro can help to lose up to 22.5% of body weight, while Norwood's flagship drugs Ozempic and Wegovy only achieve about 15% weight loss. But the downside of Mounjaro is that it has only received approval for diabetes treatment at the moment, and it is expected that it will be possible to obtain approval for weight loss treatments by the end of this year.

From a profitability perspective, Norwood is more profitable. Their gross margin and net profit are 85.1% and 36.45%, respectively, while the gross margin and net profit margin are only 77.51% and 20.35%, respectively.

From a growth point of view, the growth of the gift is more prominent. According to Finviz data, analysts forecast the company's combined earnings per share (EPS) growth of 24.81% over the next 5 years, while Nove and Nord forecast a combined EPS growth rate of just 2.8% over the next 5 years.

From a valuation perspective, using market earnings (PE) as a measure, the valuation of the company is relatively high. At the closing price for September 14, 2023, the PE (TTM) for Gift was 82.4 times and the PE (TTM) for Nord was 43.99 times.

All in all, Norwood has the advantage of having more mature products, stronger profitability, but weaker growth. And the advantage of Gifu is that the drug works better, the company has a greater growth potential, but the valuation is relatively high.

05 Risks of investing in weight loss drugs

While the weight loss market is full of potential, investors also need to recognize that there are some potential risks to investing in weight loss companies and need to be careful to differentiate between speculation and investment. Currently, weight loss companies may face the following three main risks:

• Competition intensifies: In addition to Lai and Norwood, other large pharmaceutical companies have joined the competition for GLP-1 weight loss drugs.MorningstarAnalysts expect other pharmaceutical companies to launch their weight loss pills as early as 2026. The addition of new competitors could have an impact on the company's product sales, and drug prices could fall further. In addition, in the long run, patents on some drugs may expire, providing opportunities for newcomers to the market.

• Expensive drug prices:ReutersThe report points out that the high price of weight loss pills can be a problem. For example, Wegovy costs up to $12,371 per year, which can be challenging for patients. Statistics show that only a third of patients are still using popular weight loss drugs such as Wegovy a year later, and the high cost may be one of the reasons they give up treatment. Therefore, if there is no insurance coverage, high prices may discourage some patients who want to treat obesity problems.

• High Expectations: Finally, too high expectations are also the potential risks of investing in weight loss drug stocks at the moment. So far this year (as of the closing price on September 18, 2023), Lycoming's share price is up 56.52%, while Nord's is up 36.25%. For investors considering buying shares of these companies, the problem is that there are extremely high expectations for these drugs, which may already be reflected in the company's stock prices, leaving limited potential upside space for these companies. Therefore, investors need to assess these risks carefully and make decisions based on their risk preferences and investment strategies.