A growing number of Wall Street analysts predict that the market for new weight-loss drugs, such as Novo Nordisk's Wegovy and Eli Lilly's Mounjaro, will be huge. These drugs are incretin drugs and are based on a drug called Semaglutide, which mimics a naturally occurring hormone called GLP-1 (glucagon-like peptide-1), which regulates blood sugar levels and suppresses appetite.
On Monday (October 24), Citigroup said sales of such weight loss drugs are expected to reach $71 billion by 2035, compared with the previous forecast of $55 billion. However, compared with the predictions of investment bank Guggenheim, Citigroup’s view is obviously conservative.
Guggenheim proposes that these weight-loss drugs have a market opportunity of $150 billion to $200 billion.
Guggenheim analyst Seamus Fernandez believes that by 2031 or before, GLP-1-based incretin drugs will become the most prescribed drugs. Not only do these drugs work well at controlling insulin levels and helping patients lose weight, but some ongoing studies also show their benefits for cardiovascular health, sleep apnea, and chronic kidney disease.
Fernandez expects GLP-1 sales to reach $50 billion as incretin drugs become the standard treatment for people with diabetes, with obesity patients adding another $140 billion.
Citi's forecast, by contrast, reflects more modest assumptions. It believes the number of patients choosing weekly injections will be less than 10% of the non-Medicare obese patient population.
Because these drugs are so expensive, Wegovy's list price is as high as $1,350 per month. Currently, Medicare does not cover weight-loss drugs at all, and private insurance does not guarantee coverage for those seeking weight-loss treatment.
However, the insurance situation is improving as these drugs are shown to treat cardiovascular disease. In addition, supply bottlenecks are also improving.
A number of analysts already expect these issues to be resolved over time, and predict peak sales of these drugs will reach around $100 billion by 2030. Goldman Sachs Group Inc. joined the bandwagon last Monday, issuing its latest forecast.
Goldman Sachs analyst Chris Shibutani wrote in a research note, "We estimate that by 2030, approximately 15 million adults in the United States will be treated with AOMs (anti-obesity drugs) for chronic weight management (excluding those treated for type 2 diabetes), which accounts for 13% of the U.S. adult population."
Industry analysts also expect Novo Nordisk and Eli Lilly to dominate this segment as a duopoly for quite some time. While there are a few other drugmakers looking to get into the field, they are still far behind. Goldman Sachs' model predicts that the two companies will account for 80% of the market by 2030.
Both stocks surged on optimism about the anti-obesity drug market. Eli Lilly's shares have risen nearly 60% so far this year, and Novo Nordisk's shares have risen more than 40%.