What’s News in Earnings: Who Is Winning the Obesity-Drug Arms Race?

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David Wainer (0:33)

Hey, listeners, it's Tuesday, November 4th. 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. In the pharma world, there's Eli Lilly, and then there's pretty much everyone else. Lilly's weight loss powerhouse continues to reshape the industry, with sales of its GLP-1 drugs like Zepbound soaring, and rivals scrambling to respond. In the latest twist, and the sign of just how fierce the new obesity drug arms race has become, the maker of Ozempic, Novo Nordisk, is now trying to snatch away another company in the space, Metsera, from Pfizer. At the same time, pharma's negotiations with President Trump over drug prices and import tariffs are hanging over the sector, testing how companies will deliver growth, even as blockbusters like Keytruda from Merck edge toward patent expiration, while others like Humira from AbbVie already have. We're joined by Wall Street Journal reporter Peter Loftus, who's been tracking pharma for us.

Peter, there's a lot of hype baked into this whole GLP-1 boom. What did we learn from Eli Lilly's earnings last week? Is this a sustainable growth story, or are we in kind of a bubble?

Peter Loftus (1:46)

Well, we learned from Eli Lilly that when you have a couple of drugs that are in demand, because they're so effective for weight loss and diabetes, and when you resolve some supply issues, as Eli Lilly has done, that you can basically print money. Their drug for diabetes, Mounjaro, sales more than doubled, and it's on track to become the highest selling drug in the world. Zepbound, which is basically the same drug, that nearly tripled in sales, and together they've generated billions of dollars in sales. We learned with Eli Lilly's most recent earnings report that this booming growth is not confined to the US. Mounjaro, it's rolling out to more countries, and much of the demand for it is from people who are willing to pay out of pocket for it in these other countries. If that keeps up, the market's just gonna get bigger and bigger. As far as how much of this is sustainable, that's the million dollar question. As these drugs roll out to more and more people, there's gonna be more and more pricing pressure that moderates the overall sales growth.

David Wainer (2:55)

Just as Eli Lilly was reporting earnings, Novo Nordisk was coming in with an out of nowhere aggressive bid to essentially snatch away Metsera from Pfizer. What is going on here? What is Pfizer doing to respond?

Peter Loftus (3:10)

Pfizer is not sitting back and taking this. They've already filed a couple of legal moves to try to force Metsera to honor the terms of their original merger agreement. And it's turned into this juicy or contentious takeover battle that we haven't seen in Biopharma for a while.

David Wainer (3:29)

It's interesting that Pfizer in its recent press release flagged the fact that Novo was trying to snatch away this acquisition from an American company. And Albert Bourla, Pfizer's CEO, was the first one to stand in the White House alongside President Trump and announce the deal on the drug pricing plan. What do you make of the stage we're in now with the drug pricing discussions and the tariffs?

Peter Loftus (3:51)

The Pfizer deal in September led to a lot of relief in the sense that while on its face it looked like Pfizer was making a lot of concessions on prices in the US, when you look at the details, the impact is more limited in scope than it might seem. So it's limited to reduce prices in Medicaid, where most companies already sell at a discount, and through this direct purchase model, including TrumpRx, investors and analysts see that as having less of an impact than it might seem, that there'd be a small audience for that way of buying. And a couple more companies have followed with their own announcements, and there's the expectation that eventually more will. Directly, it's led to increases in these companies' stock prices. Companies seem to be getting protection from any new tariffs down the line, and we'll see over time whether some of these discounts do add up to a big impact, at least for certain companies.