Novo Nordisk, Eli Lilly and the GLP-1 economy

SPEAKER_1 (0:00)

Well, we've got you listeners. We are very excited to be nominated for a Signal Award for our podcast. So if this is your favorite finance pod, check out the link in the show notes and vote for us online.

Rob Armstrong (0:13)

This year, the Signal, next year, the Nobel. Pushkin. Eli Lilly and Novo Nordisk are already the biggest drug companies by market capitalization that have ever drug company. And there is reason to think they may be getting even bigger. And the reason, as many listeners may know, is the GLP-1 weight loss drugs, a class of drugs that some analysts believe could grow to be $100 billion. What should we use?

Oliver Barnes (1:02)

It sounds like Dr. Evil in Austin Powers. $100 billion!

Rob Armstrong (1:06)

Some analysts believe this class of drugs could eventually be worth upwards of $100 billion a year. This is Unhedged, the Markets and Finance podcast from the Financial Times and Pushkin. I am Rob Armstrong. Coming to you from Unhedged World Headquarters in beautiful New York City, I'm joined today by my partner in crime on the Unhedged newsletter, Aiden Reiter.

Aiden Reiter (1:33)

Pleasant tidings.

Rob Armstrong (1:34)

Also, and more importantly, by the FT's pharmaceuticals correspondent, Oliver Badnews Barnes.

Oliver Barnes (1:42)

Thank you for having me, Rob.

Rob Armstrong (1:44)

You know why I call you Badnews Barnes?

Oliver Barnes (1:45)

Why?

Rob Armstrong (1:45)

Because there was a quite famous basketball player in the early 80s called Marvin Barnes.

Oliver Barnes (1:52)

I've seen the BSPN about him, yeah.

Rob Armstrong (1:55)

The most famous anecdote about Marvin Barnes is he was going to take a team flight going from east to west that was such that the plane actually landed in the new time zone before it took off. Barnes refused to board the plane on the grounds that he wasn't going to get in any goddamn time machine. He rented a car and drove instead. So that is by the by nothing. Oliver, I'm going to start with you. Do the GLP-1 drugs live up to the hype? Are they going to be as transformative as we are told?

Oliver Barnes (2:29)

I'm of the opinion they do. Clearly, there is a kind of hype bubble around them. In a way, there is around AI. But what you have with AI is a ton of companies just trying to raise money in slapping an AI sticker on the side. What you have with weight loss drugs are a kind of transformative treatment that goes to the source of treating obesity which a billion people worldwide have, a hundred million people have in America. And being obese is not good for your health. There's a ton of cascading effects. It has effects on your heart, stroke, risk, cancer, let's say.

Rob Armstrong (3:05)

And so on, all very expensive.

Oliver Barnes (3:07)

Yeah, and also they kill you.

Rob Armstrong (3:08)

Yes.

Oliver Barnes (3:09)

And the argument is, you know, as these drug makers tweak, perfect, improve these treatments, and then also convince health insurers in the US and health systems, you know, single-payer health systems in Europe of like the merits of this, of how they can make cost savings, as well as just, you know, making people look thinner and hotter.

Rob Armstrong (3:28)

Yeah.

Oliver Barnes (3:29)

That these drugs will be rolled out very, very wide scale.

Rob Armstrong (3:32)

On what scale have these been rolled out so far? Aiden, do we have some numbers around this?

Aiden Reiter (3:37)

I believe in the US there are 15.5 million people who are on these. Is that right, Oliver?

Oliver Barnes (3:41)

I think it's a little bit unknown. Like there's a lot of people who've been on them and then come off them. Because they do also have side effects, as with a lot of drugs. They have downsides. You know, you get nauseous and stuff like that. But let's assume there's a large number of people who are on them.

Aiden Reiter (3:57)

And a lot more people who could be on them.

Oliver Barnes (3:58)

Exactly. Many of whom are on the upper east side of Manhattan and maybe don't need them for medical reasons. But then also many of whom are in places.

Rob Armstrong (4:07)

And many are taking for diabetes too.

Oliver Barnes (4:09)

Exactly. That's what they were originally for.

Rob Armstrong (4:11)

Yeah, indeed.

Aiden Reiter (4:12)

There's two market leaders right now. Do you think that these market leaders can deliver on what Wall Street and what everybody expects?

Rob Armstrong (4:18)

Yeah. So that's the thing. So I'm looking at the stock prices.

Oliver Barnes (4:23)

Gangbusters.