A pair of weight-loss drugs — semaglutide and tirzapatide — could reshape the way we view and treat obesity, according to a Moody’s report dated May 18. The ratings firm notes that Novo Nordisk could benefit from a first-mover advantage in the obesity market as it now has two novel weight loss drugs on the market: Saxenda (liraglutide) and Wegovy (semaglutide). Semaglutide has already emerged as an example of a ‘viral’ drug, as Harvard Health Publishing noted earlier this year, owing to its popularity on social media and with celebrities. A YouGov survey found that 60% of Americans had heard about this class of weight loss drugs.
If Lilly’s tirzepatide, the first dual GIP/GLP- coagonist, wins approval for obesity, its developer could also profit handsomely. In April, analysts projected that annual tirzepatide sales could hit $50 billion by 2030.
Tirzapatide, which won FDA approval for type 2 diabetes in 2022, yielded “substantial and sustained reductions in body weight” in a phase 3 obesity study highlighted in NEJM last year. Earlier this year, Lilly announced that patients who took the drug who were overweight and had Type 2 diabetes had between 30 and 34 pounds weight loss depending on the dose. By contrast, placebo recipients had an average of seven pounds of weight loss.
Semaglutide and tirzapatide could address a vital market segment
In any event, Moody’s notes that the obesity market will likely grow significantly in the coming years. The World Obesity Federation projects that 892 million people across the globe will be obese by 2025 — up from 764 million in 2020. Yet, globally, only about 2% of people with obesity are currently under treatment. That fact highlights the vast untapped potential for new therapeutic interventions, concluded Moody’s, citing Novo Nordisk research.
According to Global Data, Novo Nordisk’s flagship drug, Ozempic (semaglutide), appears to be poised for sales growth of 23% in 2023. The analyst firm’s forecasted sales of $12.5 billion underscore Ozempic’s dominant market position. The projected 2023 sales figure is 54% higher than its closest competitor, Lilly’s Trulicity (dulaglutide), which is anticipated to hit sales of $8 billion. GlobalData estimaets that semaglutide will see $17 billion in revenue by 2029.
According to Moody’s, by 2025, Novo Nordisk could see nearly 25% of its total sales attributed to obesity treatments. For Lilly, obesity treatments might constitute approximately 10% of its total sales by the same year. CEO David A. Ricks has called tirzapatide one of its most important pipeline drugs.
The insurance paradox
Moody’s has, however, identified a potential wildcard that could influence the prospects of obesity drugs: the coverage offered by both private and government-run insurance plans. Out-of-pocket costs for the drugs can be in the ballpark of $1,000 each month,
Medicare’s policy on reimbursement for weight-loss treatments could continue to be precedent-setting in the U.S. Traditionally, the payor has not typically covered weight loss treatments such as medications or surgery unless it deems them to be medically necessary.
In Europe, insurance coverage varies from nation to nation. Moody’s anticipates a gradual growth trajectory, as healthcare systems consider the cost-to-benefit ratio given strict budgetary pressures there.
Obesity treatment incurs a high cost
Past efficacy and side-effect profiles of weight-loss drugs have often led to low adherence to treatment. Drugs like semaglutide and tirzepatide aim to change this dynamic. Obesity is associated with substantial economic costs. The annual cost of obesity treatment is in the ballpark of $173 billion, according to CDC.
If studies confirm the potential of GLP-1 receptor agonists and dual GLP-1/GIP agonists to curb obesity-related conditions, such as cardiovascular diseases, these drugs could offer a net economic benefit to the healthcare ecosystem.
Nevertheless, notable headwinds remain for GLP-1 receptor agonist developers. The fact that celebrities and social media influencers have taken to hawking the drugs could exacerbate misuse of the drug class, potentially inviting societal scrutiny and legal troubles.
Moody’s analysis underscores the imperative of confronting these matters. Off-label use of the drugs could lead to reputational headaches for the involved corporations. Consequently, regulatory watchdogs will likely put safeguards in place to ensure proper use of the drug class.
A potential sign of hope is the fact that GLP-1 drugs have a solid safety record in people with diabetes. Consider Lilly’s exenatide — marketed under the brands Byetta and Bydureon — that won FDA approval in 2005.
Other pharma giants on the landscape, including Pfizer and Amgen, also are developing drugs to control obesity, although their pipeline candidates in this area are relatively nascent.
As the world grapples with the growing obesity crisis, semaglutide and tirzepatide continue to offer hope, given their potential to influence biochemical triggers responsible for insulin surges, post-meal blood-sugar levels and satiety. But unlocking their potential will likely require safeguards to ensure appropriate use, affordability and acceptance by both the medical community and the patients they serve.