The Penetration of GLP-1 Weight Loss Drugs Declines for the Second Consecutive Month but Analysts Say This Is a Blip

February 1, 2024 jasabacklink News 0

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If you weren’t already aware, GLP-1 weight loss drugs from the likes of Novo Nordisk and Eli Lilly and Company are the biotech sphere’s new craze, managing to rope in seasoned analysts who appear to be salivating at the prospect of billions of dollars in additional revenue streams. Yet, the hype seems to have lost some of its patina recently.

TD Cowen analysts recently noted that they were “surprised to see two months in a row of declines in the number of people who describe themselves as current users of GLP-1s.”

Bear in mind that after reaching a cyclical peak of around 5 percent in November 2023, the penetration of GLP-1 drugs in the US has declined to 4.2 percent, as per the results of a survey. Nonetheless, TD Cowen analysts contend that this decline is likely temporary and a result of capacity constraints.

What Are GLP-1 Drugs?

Glucagon-Like Peptide-1 (GLP-1) hormone suppresses hunger by stimulating the release of insulin in the pancreas, blocking the unhelpful release of glucagon after meals to prevent excess glucose from entering the bloodstream, and slowing gastric emptying to reduce the overall intake of food.

Novo Nordisk uses Semaglutide as its proprietary GLP-1 agonist in drugs that are marketed under Ozempic and Wegovy labels. Eli Lilly and Company, the only other major competitor in this field right now, offers Tirzepatide as its proprietary drug to combat diabetes and obesity. The drug leverages a GLP-1 agonist as well as a Glucose-dependent Insulinotropic Polypeptide (GIP) one to provide supposedly better efficacy.

Novo Nordisk’s Supply Woes

Novo Nordisk announced recently that it has resumed the shipments of 1.7 mg dose strength Wegovy GLP-1 cocktail in the US following a “short-term stock-out.” The drug’s 1.7 and 2.4 mg dose strengths are primarily geared toward weight loss maintenance. However, the company continues to flag the potential for further supply-side disruptions, given the outsized demand for its bespoke GLP-1 cocktail.

Source: Quartr App

Novo Nordisk has already earmarked $9.5 billion for new production sites and capacity enhancements, with around $7 billion allocated for various investments in Denmark and a further $2.5 billion tagged for France.

Even with its current supply constraints, Novo Nordisk is posting outstanding financial results. The company reported this week that its revenue increased by 44 percent (constant currency basis) year-over-year in Q4 2023 to $9.51 billion. GLP-1 sales contributed around half of the overall growth in the company’s top-line metric.

$100 Billion in Annual GLP-1 Sales by 2030

JP Morgan recently estimated that the annual sales of GLP-1 drugs in the US would reach around $100 billion by 2030, with Eli Lilly and Company and Novo Nordisk managing to hold around 80 percent of the market share by the end of this decade. Around 7 percent of the total population in the US is expected to be using these drugs in the next 10 years, with the per capita caloric consumption of such users falling by around 20 percent.

Yet, challenges persist. For instance, North Carolina’s state health plans recently declined to cover GLP-1 weight loss drugs. Do note that Novo Nordisk’s Wegovy offering costs around $1,300 per month without any insurance coverage, while Eli Lilly and Company’s Zepbound costs $1,060.

Additionally, the FDA continues to look into reports of suicidal thoughts or actions as a direct result of these drugs. However, a recent study in the US found no evidence to back up the claims that GLP-1 drugs could lead to suicidal thoughts or actions.

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