A Market with Huge Profits: How Obesity Drugs Are Sweeping the World

The new generation of weight-loss drugs has raised great hopes in combating this global health scourge, from which laboratories and investors in this market are reaping huge profits.

More than a billion people around the world are currently obese; with expectations that nearly half of the world's population will be obese or overweight in 2030, according to the World Obesity Federation, the demand for these drugs is increasing dramatically.

It calculates that the global economic impact would be just as devastating, exceeding $4,000 billion annually.

According to the federation, the global economic impact would be equally devastating, potentially exceeding $4.000 billion annually.

Morningstar, a leading provider of independent investment research, sees the market for weight loss drugs hitting $60 billion by 2032.

The market is expected to grow by 26% annually in the next five years, compared to 16% annually for oncology drugs and 4% annually for immunological drugs.

The popularity of diabetes and weight loss drugs in recent years has sent pharmaceutical stock prices through the roof.

Modern Drugs

The Danish company Novo Nordisk is now the most valuable company in Europe, and the market value of the American company Eli Lilly has more than doubled, thanks to their modern drugs that can help people shed up to a fifth of their body weight, and which are growing in popularity globally.

But these drugs promise more than just boosting the profits of these companies, as they have recently shown another benefit in reducing the risk of cardiovascular, kidney and liver diseases.

In addition to their effectiveness against diabetes, modern anti-obesity drugs contribute to much greater weight loss than drugs currently available on the market, with side effects, such as nausea and diarrhea, that are less severe.

These drugs mimic a hormone secreted by the intestines (GLP-1) to tell the brain that we are full after eating.

In 1990, Dr. John Eng, an endocrinologist at the Bronx Veterans Affairs Medical Center, discovered that the hormone exendin-4, which is found in the venom of the Gila monster, is similar to the human hormone GLP-1, but is more resistant to enzymatic breakdown. It remains in his body for several hours.

Gila is a venomous lizard that lives in North America and eats only three to four times a year, which made it the inspiration for one of the most successful weight-loss drugs.

More than a decade later, exenatide, a synthetic version of the lizard hormone developed by Eli Lilly and Amylin Pharmaceuticals, was approved for the treatment of diabetes in the United States.

This unprecedented breakthrough has motivated other companies to develop GLP-1-based drugs that are more effective and longer-lasting as a treatment option for diabetes, apart from insulin injections.

Scientists were also aware that GLP-1 had another side effect: It slowed the speed of stomach emptying, allowing food to remain in the stomach longer and reducing appetite, but the potential weight-loss benefits were not seriously pursued at first.

In 2021, Novo Nordisk presented data from a clinical trial in which obese patients were given a weekly dose of its GLP-1-based diabetes drug, semaglutide, then marketed as Ozempic, for 68 weeks.

The results were amazing, with participants losing an average of 15% of their body weight.

Weight-Loss Drugs Market

So far only three GLP-1 drugs have been approved to treat obese or overweight individuals: liraglutide and semaglutide, developed by Novo Nordisk, and tirzepatide, made by Eli Lilly.

But the market has already attracted a wave of competitors, with Bloomberg tracking nearly 100 similar drugs in development.

Most new treatments hope to take on semaglutide and tirzepatide by creating drugs that are easier to take, cause fewer side effects, or are more effective in weight loss.

It is noteworthy that semaglutide and tirzepatide are injections that must be taken weekly, and if the dose is stopped, most of the weight loss will return within about a year.

Novo Nordisk is ramping up production to meet soaring demand in the United States, where the drug sells for as much as $1,350 a month. 

The Danish pharmaceutical company revealed in late January that it was making £32 million a day in profits.

The Danish drugmaker's share price has more than doubled in the two years since weight-loss drug Wegovy debuted.

Strong sales of diabetes and weight loss drugs Ozempic and Wegovy have prompted the Danish pharmaceutical company Novo Nordisk to raise its 2024 profit forecast to up to £15.3 billion.

On the other hand, Eli Lilly has become the most valuable pharmaceutical company in the world, surpassing Pfizer's market cap in 2022 and Johnson & Johnson last year.

Skyrocketing demand for Mounjaro and Zepbound, both chemically known as tirzepatide, has pushed the drugmaker's market value to nearly $740 billion.

In the first quarter of this year, Eli Lilly achieved revenues of $8.77 billion, up 26% year-over-year, thanks to strong sales of diabetes drug Mounjaro and obesity treatment Zepbound.

The company also expected revenues for the year to range between $42.4 billion and $43.6 billion, an increase of about $2 billion.

One investment firm sees Eli Lilly controlling roughly 40% of the weight-loss drug market by 2032, while Novo will hold 35%.

Health Problems

Weight loss drugs based on GLP-1 do not only rid the body of excess weight, especially since obesity is linked to more than 200 health problems, including strokes, kidney problems, and fatty liver.

A recent five-year study conducted by Novo, which included more than 17,500 participants, found that Semaglutide reduces the risk of serious heart problems such as heart attacks, strokes, or death from heart disease by 20%.

Last March, the U.S. Food and Drug Administration agreed to allow the use of Wegovy, chemically known as semaglutide, to reduce the risk of cardiovascular disease in obese people.

The results of another clinical trial also showed that semaglutide reduces the risk of events related to kidney disease by 24% in patients with type 2 diabetes.

Since 2021, Novo has been conducting a clinical trial including more than 1,800 patients to test whether semaglutide helps patients in the early stages of Alzheimer's disease. This study is expected to be completed in 2026.

Another weight-loss drug, semaglutide, developed by German pharmaceutical company Boehringer Ingelheim and Zealand, has shown promising results in the ability to treat metabolic dysfunction-associated steatohepatitis.

For decades, pharmaceutical companies have struggled to develop an effective and safe drug to aid weight loss.

In this regard, Dr. Benjamin Sirica, an associate professor of medicine at Harvard Medical School, noted that many drugs that were initially promising did not succeed in passing the development stage, and other drugs were withdrawn from the market.

The most famous example dates back to a year ago, when a combination of fenfluramine and phentermine (known as Fen-Phen) was withdrawn from pharmacy shelves after people who took it developed severe heart valve disease and pulmonary hypertension.

In 2010, sibutramine (Meridia) was also withdrawn from the market, after studies linked its use to an increased risk of heart attacks and strokes.