What’s News in Earnings: How Big Pharma Is Expanding the GLP-1 Market

Jessica Mendoza (0:00)

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David Wainer (0:23)

Hey, listeners, it's Friday, May 8th. I'm David Wainer for The Wall Street Journal, and this is What's News in Earnings, our look at some of the biggest themes standing out this earnings season. The weight loss drug market is still growing faster than Wall Street expects. Industry leader Eli Lilly last week reported results that blew past analyst estimates, and the company raised its forecast for sales this year.

That was mostly because of consumer demand for its GLP-1 injections. Meanwhile, Novo Nordisk said the prescriptions for its new Wagovi pill are off to a strong start. That showed that people around the world just can't get enough of weight loss drugs, with growing demand for the pills as well as the injectables. Elsewhere in pharma, companies are mostly delivering positive results, with Merck, Bristol Myers Squibb and AbbVie all posting earnings beats. But investors are still debating the durability of their long-term growth.

We're joined now by Wall Street Journal reporter, Peter Loftus, who covers the pharmaceutical industry. Peter, where do things stand in the whole pill versus pill battle? Basically, Novo's oral Wigovia going up against Lily's Fondeo. Is there a clear winner emerging, or is it still too early to call?

Peter Loftus (1:45)

Right now, you'd have to say Novo Nordisk has the edge. Their Wigovia pill really has had one of the fastest launches of any drug in pharma history.

They've already had more than a million patients using it just since January, since it came out. Of course, it did get a head start on Eli Lilly, whose Fondeo came out in April. But even if you adjust for the timing of the launch, it's clear that the Wigovia pill was doing better. And there's a couple of reasons for this. One is that the Wigovia pill showed stronger efficacy in trials than Fondeo did. And also, the Wigovia pill is using this established brand name that we first saw five years ago when the injectable version came out. Whereas Fondeo is a brand new brand name. It's less familiar to consumers. Now, that said, Lilly hasn't really started the consumer promotion, like TV ads and more. And a lot of analysts think that Lilly will have an edge when it comes to rolling this drug out internationally outside the US and having a big enough supply to be able to meet all that demand. Because it's actually a lot easier for Lilly to make a lot of its pills than it is for Novo Nordisk. One other interesting aspect for both of these companies is that the pills seem to be expanding the market for weight loss drugs overall, rather than just taking business away from the shots.

And that sort of validates the whole premise that the companies had for developing pills in the first place, was they felt there was a large untapped market of people who would just prefer a pill for weight loss.

David Wainer (3:16)

But aside from the pills, the reports showed that injections are still the main business and international markets are expanding. How do we think about the growth path from here?

And what are risks investors should be watching for?

Peter Loftus (3:29)

Yeah, I mean, Lilly's results showed that sales of Monjaro, which was for both diabetes and obesity, more than doubled and it's probably on track to being the highest selling drug in the world. ZepBound, the weight loss version of this in the US was up something like 80 percent. There's still an expectation of just strong continued growth for these drugs in both shot and pill form.

The one thing that's changing and I guess you could call this a risk for investors, but maybe good for consumers is that the pricing has been coming down in a pretty remarkable way. These drugs started with list price of $1,000 a month or above.

Now, they're coming down to as low as $149 a month. That big price reduction is going to put a damper on overall sales, so much so that some analysts have actually reduced their estimates of the overall market size for obesity drugs. Novo Nordisk is actually predicting its overall sales will decline this year. So the companies have basically accepted this trade-off of price for volume.

David Wainer (4:32)

Let's switch gears. Another massive market is the autoimmune space. Think of all those ads for clear skin or joint pain. The market for drugs that treat conditions like psoriasis and Crohn's has gotten incredibly competitive. The big fear here for the leader, AbbVie, has been J&J making inroads with its spills, while AbbVie tries to defend its turf with its injections.