Eli Lilly, Novo Nordisk's Strategies Against New Weight-Loss Drug Competitors

The race for new drugs to fight obesity and associated diabetes and cardiovascular diseases heated up on Monday after positive results from trials by Zealand Pharma were published, pushing the Danish company’s shares 30% higher.

Zealand Pharma’s survodutide drug showed positive results in 83% of patients in Phase 2 trials being tested for a liver disease caused by excess fat cells called MASH, the company announced on Monday.

“Survodutide has demonstrated efficacy in people with obesity, and statistically significant results in MASH suggest the potential to lead to clinically meaningful benefits across the cardiovascular, renal, and metabolic spectrum,” the announcement said.

The blockbuster impact of drugs such as Novo Nordisk‘s NVO Ozempic and Eli Lilly And Company‘s LLY Mounjaro, have driven dozens of companies to research and develop rival weight-loss treatments and further announcements of breakthroughs in the fast-developing market are expected in 2024.

Impact Of Weight-Loss Drugs On Q4 Results

Currently, they are the main two players. Thanks to its Mounjaro and Zepbound treatments, Eli Lilly crushed analysts estimates for fourth-quarter earnings, reported earlier this month, with a 19% increase in earnings per share to $2.49, beating Street expectations of $2.22.

Upgrades soon followed with analysts from Cantor Fitzgerald and Morgan Stanley raising their price targets on the stock.

Novo Nordisk’s results were similarly impressive, with its Wegovy and Ozempic offerings helping fourth-quarter sales to soar 37% to $9.5 billion, compared with expectations of $8.82 billion.

Market To Become More Crowded

Health and medical information research company Stat, suggests that around 70 weight loss drugs are currently in development to catch the exploding market — including from large and well-established pharma companies such as AstraZeneca Plc AZN and Pfizer Inc PFE.

This suggests the early runners, Novo Nordisk and Eli Lilly, will find the space becoming more crowded in the months to come as many newly-developed treatments receive fast-track drug designations from global regulators.

How can they respond? They can certainly make hay while the sun shines — indeed, Novo recently announced the acquisition of Catalent Inc CTLT, a New Jersey-based manufacturing facility, so that it can scale up production of Wegovy and Ozempic within their biggest market.

Meanwhile, Eli Lilly has turned its focus to the marketing side of its blockbuster treatments, announcing in January the launch of a new digital health-care platform, LillyDirect, that will offer drugs directly to consumers who have been prescribed the medications.

Shares in both Novo and Eli Lilly have outperformed broader measures of pharmaceutical stocks. Novo is up 19% so far this year, while Eli Lilly has gained 33%.

The iShares U.S. Pharmaceuticals ETF IHE, an exchange traded fund that tracks U.S. pharma companies, is up 12.5% in 2024.

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