Unlock the Editor’s Digest free of charge
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.
That the weight problems market will likely be large is a given, with gross sales projected to rise to $150bn by 2030. However it will likely be crowded, too. The premium valuations loved by the present duopoly — Denmark’s Novo Nordisk and the US’s Eli Lilly on 32.5 and 57.6 instances 2024 earnings respectively — are predicated on the truth that their heft will enable them to maintain on prime of the competitors. Novo Nordisk’s detect Friday places that doubtful.
The Danish pharma group says individuals in a late-stage trial for its subsequent technology weight-loss compound CagriSema, a mix of semaglutide and cagrilintide, lost “only” 22.7 per cent of their body weight on average. That could be a fantastic end result by any measure — besides one. Novo Nordisk had focused weight lack of 25 per cent. Its inventory was down a fifth within the early afternoon, wiping €85bn off its market capitalisation.
On the face of it, that appears like a giant response to a small miss. It’s equal to greater than the entire of the web current worth of CagriSema’s future gross sales, which Berenberg analysts put at DKr130 per share, or round €75bn.
Precisely why the drug underperformed expectations isn’t completely clear. It could must do with dosing, since solely 57 per cent of sufferers within the trial acquired the best quantity of the drug. In the meantime, even at 22.7 per cent weight reduction, CagriSema is marginally forward of Eli Lilly’s Zepbound, which in a current trial lowered physique weight by 22.5 per cent.
But there may be some logic to the market’s response to Novo Nordisk’s miss. Had CagriSema managed to shave 1 / 4 off sufferers’ physique weight, that might have given it a transparent lead within the subsequent technology of medication. As issues stand, it has failed to shut the sphere to approaching compounds, together with Eli Lilly’s Retatrutide, for which trial outcomes are anticipated in 2026. The US pharma group’s inventory was up in pre-market buying and selling.
Extra broadly, there are 120 weight-loss brokers being trialled by 60 corporations in keeping with IQVIA analytics, making for a crowded pipeline. It will by no means be a winner-takes-all market given totally different sufferers may have totally different necessities and totally different reactions to obtainable medication. However a giant chunk of Novo Nordisk’s valuation depends on hopes that its dimension, experience and money flows will give it a head begin. This isn’t a race wherein incumbents can afford to lose their footing.
