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That the obesity market will be huge is a given, with sales estimated to increase to 150bn by 2030. But it will get crowded, too. The premium prices enjoyed by the current duopoly – Novo Nordisk of Denmark and Eli Lilly of the US at 32.5 and 57.6 times in 2024 respectively – are predicted from the fact that their heft will allow them to remain at the top of the competition. Novo Nordisk's debacle on Friday casts doubt on that.
The Danish pharma group says that participants in a previous trial of the next-generation weight-loss drug CagriSema, a combination of semaglutide and cagrilintide, they lost “only” 22.7 percent of their body weight on average. That's a good result by any measure – except one. Novo Nordisk aimed for a weight loss of 25 percent. Its stock was down five in the afternoon, wiping 85bn from the stock market.
On the face of it, that seems like a big answer to a small mistake. It is equal to the entire current price of CagriSema's future purchase, which Berenberg analysts put at DKr130 per share, or about 75bn euros.
The exact reason why the drug does not work as well as expected is not entirely clear. It may have something to do with the dosage, because only 57 percent of patients in the trial received the highest amount of the drug. Meanwhile, even at 22.7 percent weight loss, CagriSema is slightly ahead of Eli Lilly's Zepbound, in a recent test to reduce body weight by 22.5 percent.
But there is logic in the way the market reacts Novo Nordisk's miss. If CagriSema was able to shave a quarter off patients' body weight, that would give it a clear lead for the next generation of drugs. As things stand, it failed to close the field for future compounds, including Eli Lilly's Retatrutide, whose test results are expected in 2026. The group's US pharma group was on top in earlier sales.
Overall, there are 120 loss agents evaluated by 60 companies according to IQVIA analytics, creating a tight pipeline. This will never be a winner-take-all market given that different patients will have different needs and different responses to available drugs. But a large chunk of Novo Nordisk's forecast rests on the hope that its size, expertise and cash flow will give it a head start. This is not a race where the incumbents can lose their footing.