The weight loss drug market is too profitable to be abandoned! Pfizer, after setbacks, resumes operations

World-renowned pharmaceutical company Pfizer is aiming to improve its performance after the pandemic and achieve a turnaround by entering the lucrative weight-loss drug market.

First, Pfizer evaluated the prospects of the weight-loss drug market. Pfizer expects the weight-loss drug market to grow to around $130 billion in the next decade, with oral tablets expected to capture about one-third of the market. Therefore, Pfizer hopes to compete by developing an oral weight-loss drug called danuglipron against popular weight-loss injectables from Novo Nordisk and Eli Lilly. This oral weight-loss drug does not require injections and is expected to rival traditional injectables.

However, Pfizer has made little progress in treating obesity. Last December, Pfizer halted the development of the twice-daily Danuglipron treatment drug because many patients dropped out of a mid-stage study involving about 1,400 people due to side effects (nausea and vomiting). A few months ago, Pfizer also abandoned another oral weight-loss drug due to adverse effects on the liver during trials.

As a result, Pfizer is embarking on a new attempt. On Thursday, July 11th, Pfizer announced a small study involving 20 subjects testing four different formulations, reducing the drug's dosing frequency from twice daily to once daily to determine which may be most effective. While the company did not disclose which formulation showed the best results, only stating that one formulation exhibited the "most favorable profile," outgoing Chief Scientific Officer Mikael Dolsten mentioned that several versions of the drug showed "encouraging" results and believed that the "once-daily formulation has competitive potential in the weight-loss drug market."

In response to this news, Pfizer's stock price rose by 3.1% at the opening on Thursday, but the gains were halved later.

Looking ahead, Pfizer plans to advance this drug to the mid-stage research phase in the second half of this year. Some analysts originally thought that in order to narrow the gap with Eli Lilly and Novo Nordisk, Pfizer might skip this step and directly enter the late-stage research phase to expedite regulatory approval. The company stated that the next trial will aim to find the ideal dose of the drug, and if successful, the drug will move into the final development stage.

However, Sam Fazeli, Director of Media Intelligence Research, stated that in the best-case scenario, this drug may only be on the market by 2028, by which time there may already be multiple competitors in the market.

Declining Company Performance, Chief Scientific Officer Resignation, Pfizer Faces Challenges

CEO Albert Bourla is under immense pressure as investors doubt whether the company's new drug development pipeline can reverse the decline in performance post-pandemic. In the first quarter of 2024, Pfizer's sales declined by 20%, mainly due to a significant decrease in demand for COVID-19 vaccines and drugs, leading Pfizer's financial forecast for this year to fall below Wall Street's expectations, and its new vaccine (targeting the RSV virus) also underperformed Pfizer has just announced that its Chief Scientific Officer Mikael Dolsten, who has served for 15 years, is about to resign. Under his leadership, Pfizer developed best-selling drugs like Eliquis and Prevnar, but these best-selling drugs are facing fierce competition, and Pfizer has not yet found new products to replace them.

During the pandemic, Pfizer's COVID-19 vaccines and drugs brought in over $100 billion in sales in just two years, providing the company with a brief respite. However, this success was not sustained. The demand for booster shots in the market has dropped significantly, leading Pfizer to recall a large amount of drugs from the government last year. Currently, the company's stock price is approaching its lowest point in a decade.

How do analysts view this?

The media pointed out that Pfizer lags behind Novo Nordisk and Lilly. Lilly's weekly injectable drug Zepbound was approved in the US last year and is expected to have high sales. Lilly also has an oral weight loss drug in the final stages of development, with key trials expected to conclude in April. In addition, the market competition is intense, with AstraZeneca, Structure Therapeutics, and other companies also developing oral weight loss drugs.

As Pfizer has not immediately responded to inquiries from the public about whether more detailed research data on danuglipron will be released, analysts find it difficult to make an accurate assessment of the results of this study due to the lack of specific information, hence analysts are relatively cautious about Pfizer's progress in this regard.

Jefferies analyst Akash Tewari pointed out that some key questions regarding danuglipron remain unanswered. Evercore analyst Umer Raffat believes that Pfizer may be "buying time" to observe the performance of another weight loss drug it is researching.

Wall Street has been pinning its hopes on weight loss drugs, seeing it as a way for the company to revive its performance, and has been constantly probing Bourla about the company's plans in the weight loss drug market. During Pfizer's last quarter earnings call, analysts creatively raised this question four times, with one even mentioning a job advertisement on the company's website seeking clinical doctors with weight loss drug experience.

Pfizer will release its earnings report later this month, giving analysts the opportunity to further discuss the research results released on Thursday and their future in the weight loss drug sector.