Eli Lilly and Novo Nordisk are a 'duopoly' in GLP-1 market

GLP-1 weight-loss drugs have been major revenue generators for pharmaceutical companies such as Eli Lilly (LLY) and Novo Nordisk (NVO). Goldman Sachs US Lead Biotechnology Analyst Salveen Richter joins Catalysts to discuss the state of the weight-loss market and the potential headwinds for these pharmaceutical companies.

"There's been a duopoly situation via Lilly and Novo," Richter explains. She points to Zealand (ZEAL.CO), Amgen (AMGN), and Regeneron (REGN) as companies she's watching that could become competitors in the weight-loss market.

She notes that Eli Lilly and Novo Nordisk are facing limited supply as demand skyrockets. The two pharmaceutical companies have to make significant investments to expand manufacturing capabilities, and Richter explains, "I think what everybody realizes is based on the opportunity, the investment in manufacturing and supply has to come in much earlier than perhaps thought before."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Melanie Riehl

Video transcript

Gp one drugs like OJ and that bound have been huge cash generators for the manufacturers with eil the maker of J and that bound reporting $5 billion in revenue last year from just the two diabetes and weight loss drugs alone.

What are their competitors doing to catch up as the research and technology and its next phase?

For more on this, we bring in solving rich Goldman Sachs us lead biotech and so great to speak with you and thank you so much for being here.

Uh I know that you just got back from this conference and it's interesting because we constantly have guests coming on saying the health care space.

It's so defensive.

I wonder from your perspective and some of the conversations that you had this week, how much is the weight loss drugs of it all playing into that trade?

Sure.

Thanks for hosting me.

Really nice to be here and we did just come off our Goldman Sachs Health Care Conference in Miami.

Um So I think there is a defensive nature clearly.

Um but there's also macro dynamics that have been playing out this year, the weight loss dynamic that's happening and the theme that's happening is, is probably one of the biggest we've we've ever seen for the sector we just came out with 100 and 30 billion as the total addressable market that we're looking at.

Um And very much there's been a duopoly situation via Lily and Novo.

Um And there was a lot of commentary at the conference about how to think about these next generation um options that are coming in that are looking at improving upon efficacy upon tolerability, um as well as the um the ability to deliver in a different way such as an oral versus injectable and then finally maintenance.

Um because if this is going to be a chronic disease, you want to be able to, you know, manage through a long time period.

And then there's people looking at quality of weight loss such as the muscle loss.

So si guess the question is after Eli Lilly, after Novo Norris, when you kind of get down to some of those players that are now entering the space or see that real opportunity who should have or what should investors be considering when they are trying to get some exposure uh into that excitement.

So the, the third company that's likely to enter is Zealand, which is based out of Europe.

The um the fourth is likely MJ and they will show us their phase two data by year end at a once a month to once every three months injectable potentially with a differentiated approach.

And then we're watching Regeneron as a player going after the quality or body proportionality of weight loss.

Meaning right now when you lose weight, about 40% of that's coming from muscle.

So they're trying to address that side of the story.

I know that you don't cover this name specifically, but just as an example, the him and hers health company kind of offering their own compounded version, which is not FDA approved.

But I am curious to what extent you think that could be a headwind for the FDA approved names.

As people just start buying the compounded versions that are a little bit more excess, they don't need as much clinical approval.

Is that a potential headwind for the companies that are selling FDA approved drugs?

I think that's coming into debate right now because there's limited supply, right?

There's there's significant demand and you've heard Lilly and Novo talk about how many plants they would have to build to be able to address the supply.

Um So I think when we start to see them expand on manufacturing, but also these new entrants coming in who have manufacturing capa capacity like Amgen talked about at length about their ability to manufacture here that should kind of aid and also you'll have a differentiated approach, right?

We're looking at the next generation, the second generation and beyond of these drugs.

So I mean, when it comes to the ability to meet that demand, right?

So much of the conversation has been centered around supply, lack of supply.

What every what so many of these bigger players are doing, trying to address that.

What's the realistic timeline just in terms of getting more manufacturing online and and realistically maybe being able to meet that demand in the future.

So um some plants have existing capabilities like in Amgen does they have huge plants around the world and they can work on this but they have to build and they have to put money into it.

And I don't think we necessarily have a timeline.

I think Eli Lee talked about a couple of years recently to be able if they were to address all of it, but you're going to have multiple players.

And so I think there's going to be significant investment, maybe there's a way to use contract manufacturing organizations and bring them into the process here.

Um And then other players will decide, but I think what everybody realizes is based on the opportunity the investment in manufacturing and supply has to come in much earlier than, than perhaps thought before.

What ending are we in to getting the amount of supply to reach the demand?

I mean, a very maybe the the 1st 3rd.

Yeah.

Yeah, a lot of it's been incredible to watch the excitement surrounding so many of these players and also just the real opportunity you mentioned about 100 and 30 billion.

Do you say it was the.

Yeah.

All right.

Well, thank you so much, Salve for coming in, especially after your travels.

Really appreciate it.

Thank you so much.

Thank you for having me.

Thank you, Salve Richter Goldman's uh us lead biotech analyst.

Appreciate it.

Thank you so much.