By Patrick Wingrove and Michael Erman
SAN FRANCISCO (Reuters) -Pharmaceutical executives from Amgen (NASDAQ:AMGN) to Pfizer (NYSE:PFE) are plotting to break into the lucrative obesity market by developing or cutting deals to acquire better drugs that will compete with Novo Nordisk (NYSE:NVO)'s Wegovy and Zepbound from Eli Lilly (NYSE:LLY).
At stake is a market that is now estimated to reach $100 billion at a minimum by the end of the decade, as consumers flock to the new treatments that have been shown to reduce weight by as much as 20%. Drugmakers are also testing these drugs for other health benefits such as lowering cardiovascular disease risk and obstructive sleep apnea.
Shares Eli Lilly and Novo Nordisk are up around 75% and 60%, respectively, over the last year, far outpacing the broader pharmaceutical sector. The NYSE's Arca Pharmaceutical Index, which includes both companies, is up just 10% over the same period.
Amgen has an experimental dual mechanism obesity drug in mid-stage trials it hopes will have fewer side effects with less frequent dosing than Wegovy or Zepbound, Chief Scientific Officer Jay Bradner told Reuters at the annual JPMorgan health conference in San Francisco this week.
Wegovy and Zepbound belong to a class of drugs called GLP-1 agonists developed for type 2 diabetes that reduce food cravings and cause the stomach to empty more slowly.
Bradner said if that differentiation from the market leaders is demonstrated, it would give Amgen a footing in the obesity market despite Novo and Lilly's head start.
"It's really not too late to be entering the obesity market. There remains massive unmet need, and the public health need is not fully addressed by the medicines that have already been approved," he said. Nearly 115 million U.S. adults and children are obese.
German drugmaker Boehringer Ingelheim is developing an obesity treatment with Danish biotech Zealand Pharma (NASDAQ:ZEAL) that targets GLP-1 as well as another hormone called glucagon.
"I think we may be the first to bring a GLP-1/glucagon receptor agonist (to market)," said Boehringer's head of discovery research Clive Wood. By targeting glucagon, the drug also increases energy expended.
"While you're suppressing appetite, you're burning more calories," Wood said. Merck and small biotech Altimmune (NASDAQ:ALT) have similar drugs in development.
Bayer (OTC:BAYRY) pharmaceuticals head Stefan Oelrich in an interview at the conference said the company was reluctant to venture into the obesity market on its own, but may look to partner with companies with the right expertise.
Pfizer will focus on drugs already in its pipeline and look for licensing deals or to acquire less expensive earlier stage obesity assets, CEO Albert Bourla told reporters at JPMorgan.
"Pfizer's position is that we believe obesity is a place that we have the ability to play and win. So we will have to play," he said.
$150 BILLION MARKET?
Bourla also said some estimates for the eventual size of the obesity market had grown to $150 billion a year, up 50% from industry executives' and analysts' most optimistic predictions less than a year ago.
In 2023, U.S. demand outstripped supply for the Novo and Lilly weight-loss drugs. Lilly CEO David Ricks said its supply of Zepbound may not be enough to meet demand this year either. Novo Nordisk in August said constraints on Wegovy supplies would most likely extend into 2024.
While the market is going to be big enough to support several players, ClearBridge Investments analyst Marshall Gordon said entering now would be a challenge because Lilly and Novo have other new obesity drugs far along in late-stage trials in addition to their blockbuster medicines.
ClearBridge owns shares in both companies, according to LSEG data.
"It's going to take more than just a ‘me-too’ here. Somebody's going to have to have another insight that Lily and Novo don't get to first," he said.