Novo Nordisk vs. Eli Lilly, the kings of weight loss drugs are taking different paths | Insight Research

With the increasing number of potential payers for GLP-1 weight-loss drugs, the battle for the weight-loss drug market between Eli Lilly and Novo Nordisk has entered a new stage.

A survey conducted by a US employer on the perception of GLP-1 drugs reveals an important market trend: 81% of employers believe that employees are interested in including GLP-1 in their insurance, while only 25% of US employers currently provide insurance coverage for GLP-1. With the rising interest of employees, this proportion may reach 43% next year.

Eli Lilly and Novo Nordisk have gained significant first-mover advantages in the rapidly growing GLP-1 weight-loss market. However, they have distinct differences in product development and business strategies. This means that under the booming market trends in the coming years, they will take different paths of business development through different product market strategies.

Novo Nordisk adopts a strategy where semaglutide serves as the cornerstone, focusing on the development of semaglutide from diabetes, weight loss, to heart failure, chronic kidney disease, NASH, Alzheimer's disease, and other broad indications, continuously breaking through the revenue ceiling of indications.

Eli Lilly, on the other hand, adopts a multi-target approach, simultaneously developing dual-target, triple-target, and small molecule oral drugs, striving to achieve the best effects in weight-loss indications.

Eli Lilly's comprehensive layout of multiple routes for weight-loss, seeking the best efficacy in the entire market

Eli Lilly's dual-target (GLP-1R/GIPR) weight-loss drug tirzepatide, which was launched in May last year, has become one of the fastest-selling drugs in the history of medicine, breaking various records set by semaglutide when it was first launched.

Tirzepatide sold a total of $1.55 billion in the first half of 2023, with sales reaching $980 million in the second quarter, a quarterly MoM growth of 72%. Based on this, Eli Lilly has further raised the annual sales forecast for tirzepatide to $4 billion.

In a recent indirect study comparing tirzepatide and semaglutide, tirzepatide at doses of 10 mg and 15 mg can lead to additional weight loss of 4.0% to 5.6% and 5.4% to 6.8%, respectively, compared to semaglutide 2.4 mg. Considering that these two drugs have similar side effects, it is clear that Eli Lilly's drug is the winner in weight-loss indications. Eptinezumab has already demonstrated its competitive advantage in the field of weight loss indications, but Eli Lilly has not stopped pushing forward.

The phase 2 data of Eli Lilly's weight loss drug, Retatrutide, targeting three receptors (GIPR/GLP1R/GCGR), is even more impressive. In the phase 2 clinical trials, Retatrutide achieved an average weight loss rate of 17.5% at 24 weeks and 24.2% at 48 weeks, starting from the baseline weight.

In addition, Eli Lilly has also developed a small molecule version of Retatrutide called Orforglipron, which has a bioavailability of 21%-28%, more than 20 times that of peptide oral drugs like semaglutide. The results are equally impressive, with phase 2 clinical data showing an average weight loss of 14.7% in obese or overweight adults after 36 weeks of once-daily oral administration of Orforglipron. Although the oral version requires daily medication, it is clear that patients have higher compliance.

Another advantage of Eli Lilly lies in its production method. As mentioned in the Analysis Report by Dolphin Research, the shortage of semaglutide in the United States has caused a chain reaction, even affecting the previous generation product, liraglutide. Now, even eptinezumab is in short supply in the U.S. market, and the entire weight loss drug market is facing a shortage of production capacity.

Eptinezumab and semaglutide are both peptide drugs, but their production methods are completely different. Eptinezumab is produced using chemical synthesis (solid-phase + liquid-phase synthesis), which is more easily outsourced for capacity expansion compared to semaglutide's fermentation + solid-phase synthesis method. On the other hand, Novo Nordisk's choice to produce all raw materials in-house directly limits the speed of semaglutide's production.

In response to this key difference, there are rumors that Eli Lilly has found peptide chemical synthesis outsourcing partners in China.

Benefiting from the demand for peptide manufacturing in the weight loss market, leading domestic CXO company, Pharmaron, recently announced that the volume of its peptide solid-phase synthesis reactor will be increased from the originally planned 20,000L to 32,000L.

Striving for better weight loss data, adopting a multi-product strategy, rapid production, and more convenient manufacturing have become Eli Lilly's approach in the field of weight loss. Novo Nordisk, on the other hand, has clearly chosen a different path.

Novo Nordisk is all in on semaglutide, with over 300 clinical trials exploring all potential indications related to semaglutide. Semaglutide has undoubtedly become the new benchmark for weight loss drugs, gaining rapid word-of-mouth reputation and becoming the top choice for consumers considering weight loss drugs, even receiving free endorsement from Elon Musk.

The tremendous success in reputation is not only reflected in patient choices but also in the widespread recognition among practicing physicians. Surveys have shown that even though there may be other drugs with better efficacy, doctors currently tend to continue prescribing semaglutide. This creates a brand barrier that is difficult for other drugs to replace. The commercial development logic of this brand barrier is precisely based on the successful interpretation of the large-scale clinical trials of semaglutide by Novo Nordisk. Novo Nordisk not only obtained two super indications, diabetes and weight loss, for semaglutide, but also systematically expanded into other super indications such as cardiovascular disease (CVD), chronic kidney disease (CKD), NASH, and Alzheimer's disease.

For this reason, some investors even jokingly say that semaglutide may be the "elixir of eternal youth" that people have been searching for thousands of years.

According to data from ClinicalTrials, semaglutide has registered approximately 348 clinical trials, including large-scale and high-cost trials with thousands of participants and a duration of more than 8 years. These extensive clinical research investments, combined with a stable first-mover advantage in the market, have created a strong and unique barrier.

Even though semaglutide may not be the most outstanding in terms of weight loss, its clinical progress and potential efficacy in other diseases related to diabetes and obesity continue to enhance its potential for expansion and sales.

Currently, semaglutide has achieved excellent clinical results in the fields of heart failure and chronic kidney disease.

On October 10, 2023, Novo Nordisk announced that the Phase III clinical trial FLOW, which evaluated the treatment of semaglutide in type 2 diabetes patients with concomitant renal impairment and chronic kidney disease, was terminated early due to excellent efficacy.

The Independent Data Monitoring Committee (IDMC) summarized the interim data and found that the efficacy met specific predefined criteria, therefore recommending the termination of the FLOW clinical trial. Although the clinical results are still blind to Novo Nordisk, it is expected that relevant data will be read out in the first half of 2024.

If such efficacy is confirmed after the data readout in the first half of 2024, semaglutide will further become an important treatment option for the relevant patient population. At the same time, this will bring positive market and financial impact to Novo Nordisk, further consolidating its leading position in the treatment of diabetes and kidney disease.

Earlier on August 25, 2023, Novo Nordisk announced the results of the Phase III STEP HFpEF trial, which evaluated the treatment effect of 2.4 mg semaglutide per week on obese adults with heart failure with preserved ejection fraction (HFpEF). The results showed that semaglutide effectively alleviated the symptoms of heart failure, improved exercise capacity, and promoted weight loss in these patients.

Specifically, patients in the semaglutide group had an average increase of 21.5 meters in the 6-minute walk distance (6MWD) test at 52 weeks, while patients in the placebo group had an average increase of 1.2 meters, with an estimated treatment difference of 20.3 meters (p<0.001). These research findings will have a positive impact on Novo Nordisk's treatment of heart failure and may also provide a new and effective treatment option for obese patients with HFpEF. As more clinical data is disclosed, semaglutide may have broader applications in the field of heart failure treatment.

In addition, it is worth noting that this is not the first diabetes drug used in the field of heart failure and chronic kidney disease. Previously, another major target in the field of diabetes, SGLT2 (sodium-glucose co-transporter-2 inhibitors), represented by empagliflozin (brand name Jardiance), has been approved by the FDA in the United States for the treatment of heart failure and chronic kidney disease (CKD) in adult patients.

In the field of heart failure:

• On August 18, 2021, the FDA approved empagliflozin for the treatment of heart failure with reduced ejection fraction (HFrEF) in adult patients to reduce the risk of cardiovascular death and hospitalization.
• On February 24, 2022, the FDA expanded the approval of empagliflozin to include all heart failure patients, regardless of their ejection fraction, to reduce the risk of cardiovascular death and heart failure hospitalization.

In the field of chronic kidney disease (CKD):

• On September 22, 2023, the FDA approved empagliflozin 10 mg tablets for the reduction of the risk of sustained decline in estimated glomerular filtration rate (eGFR), end-stage kidney disease, cardiovascular death, and hospitalization in adults with chronic kidney disease.

Especially in the field of heart failure, SGLT2 drugs have been recommended in the 2022 AHA/ACC/HFSA Heart Failure Management Guidelines, becoming the fourth drug for heart failure. Empagliflozin, represented by SGLT2 drugs, achieved global revenue of $8.215 billion in 2022, ranking 15th in the global pharmaceutical sales ranking.

It is obvious that semaglutide is expected to enter the heart failure drug guidelines in the future, just like empagliflozin, once again opening up the sales ceiling. And this is only in the field of heart failure. Semaglutide is also undergoing large-scale clinical trials in other areas such as NASH, Alzheimer's disease, and the lifelong impact of weight loss. Each new indication means the possibility of further expanding its sales ceiling.

Jianzhi Research mentioned in the article "The Next Billion-dollar Market for Weight Loss Drug GLP-1 - NASH" that the success of semaglutide even made giants like Merck tremble. Its GLP-1R/GCGR dual-target agonist, Efinopegdutide, directly gave up the indication for weight loss and chose to compete head-to-head with semaglutide, which has not yet been approved, in the indication of NASH in clinical trials. Dolphin Research believes that this not only shows that Merck believes that semaglutide has the potential to become the world's first approved drug in the field of NASH, but also reflects the industry's consensus on the potential success of the GLP-1 target in NASH treatment.

Let's go back to the indication for weight loss.

For the next generation of drugs, unlike Lilly's multi-target and brute force strategy, Novo Nordisk still uses the CagriSema scheme based on semaglutide, combined with Cagrilintide. Cagrilintide is a long-acting insulin analogue specifically designed for the treatment of obesity and type 2 diabetes.

The CagriSema scheme has shown more significant weight loss effects than semaglutide monotherapy.

In the first half of 2023, the three versions of semaglutide had a total sales of 9.2 billion US dollars. This is Novo Nordisk's plan to maximize the potential of the GLP-1 target in all indications through first-mover advantage and high-cost clinical trials.

In summary:

Novo Nordisk, with semaglutide as the core, has developed a product line that covers multiple indications including diabetes, weight loss, heart failure, chronic kidney disease, NASH, and Alzheimer's disease, thereby breaking through the revenue ceiling.

Lilly adopts a more flexible R&D model, achieving the ultimate effect in weight loss indications through dual-target, triple-target, and small molecule oral drugs, and driving revenue growth with better weight loss efficacy.

For Chinese manufacturers, the choice of model is even more important than the product itself. The huge clinical costs and long clinical trials are burdens that Chinese manufacturers cannot bear. From the perspective of R&D and business strategy, Lilly's tirzepatide model may be a better choice for Chinese manufacturers.