Big pharmaceutical companies had earnings reports this week, but not all results were great.
While Covid medication is becoming less important as the number of cases worldwide are decreasing both in number and severity, we are seeing a continuation of the rise in the medication for weight loss, writes eToro analyst for Romania, Bogdan Maioreanu
Obesity is a massive problem worldwide with up to 650 million overweight people, and the new anti-obesity medication prompted a consumer frenzy, leading to shortages in some products . The market, which is estimated to reach $100 billion by the end of the decade, has triggered a “gold rush” for the most effective drug with the least adverse effects.
These weight loss medications mimic a hormone released from the digestive tract called glucagon-like peptide (GLP-1), which helps lower blood sugar and promotes a feeling of fullness. The anti obesity drugs approved by the American regulators from FDA are Wegovy from Novo Nordisk and recently, Zepbound from its biggest rival and the largest pharma company in the world by market capitalization, Eli Lilly.
Novo Nordisk, now Europe’s most valuable company and the second largest pharmaceutical company in the world by market capitalization, delivered another record financial result. With continued strong growth in sales of the GLP-1 diabetes treatment Ozempic and the weight-loss blockbuster Wegovy, the Denmark-based company achieved sales of DKK 232 billion (about 31 billion euro). That’s a 31% increase in 2023 and close to doubling revenue from 2019.
With a growth of 60% and sales of DKK 96 billion (about 12.9 billion euro), Ozempic, already the world’s best-selling diabetes medicine, continues its solid performance. At the same time, the tablet version Rybelsus is experiencing strong sales growth. However, the increased sales of these GLP-1 products are at the expense of Novo Nordisk ‘old core business’ with sales of insulin products now cannibalized by the newer products and falling by 9% to DKK 48 billion (about 6.45 billion euro).
The other major growth driver is the weight loss drug Wegovy, which sales saw a wild growth of +400%. But there is still room for more as currently it is available only in the US and other 6 European countries, and the rollout has only just begun.
Novo’s management expects a total sales growth of 18-26% in 2024, which will continue to be driven by the GLP-1 therapies Ozempic and Rybelsus’ and the continued roll-out of the weight loss drug Wegovy to the broader global markets.
Pfizer, the 10-th largest pharma company in the world by market value, reported $58.8 billion revenue for the whole 2023 year, with a 41% YoY decline amid a sharp reduction in global revenue for its COVID-19 vaccine, Comirnaty, and COVID-19 pill, Paxlovid. The company is forecasting 2024 revenues of $58.5 to $61.5 billion which include 8 billion estimated revenue for Covid vaccine and pill. The Covid epidemic is losing significance. According to WHO in the last 28 days ending with January 14th we had less than 1 million Covid cases worldwide resulting in over 11,500 deaths. During the earnings call Pfizer did not make any references to the legal proceedings against Romania, Hungary and Poland related to the Covid vaccines.
In search of new niches, Pfizer is aiming now to achieve world-class oncology leadership after the $43 billion purchase of the company Seagen, closed in December last year. It is also looking to maximize revenue on other vaccine products and types of medications currently available and to bring to the market new products. The size of the weight loss drugs market prompted the company to invest in R&D in this area too with a similar drug currently in trials.
The rush for a Covid cure from three years ago is replaced now with the rush to corner the weight-loss market. Novo Nordisk stock increased over 56% in the last 12 months, Eli Lilly gained over 87% while Pfizer lost almost 38% in the last 12 months and over 50% from its peak. Despite this, for the Romanian investors on the eToro platform, Pfizer was the stock with the largest increase in number of holders in the last quarter of 2023, of almost 8%, with the lower share price making the company more attractive for them.
