Analysts predicted new obesity medicines would be blockbusters. Now they’re raising their forecasts


As new weight-loss medications gained popularity last year, analysts predicted that these drugs would become blockbusters. Some of the most optimistic estimates called for sales to reach at least $100 billion. Recent days have seen expectations rise even higher. Initial projections were made prior to Wall Street seeing the results of Novo Nordisk Select’s trial in August. Early results from the study show that semaglutide (also known as Ozempic or Wegovy) could reduce stroke and heart attack risk by 20%. The complete data from this trial will be presented at the American Heart Association Conference in mid-November. This was also before people started to report on social networks about what they observed after taking these drugs. Patients reported how much weight was lost or that they no longer craved food or alcohol. After losing weight, some patients no longer required CPAP machines for their obstructive sleeping apnea. The companies also continued their scientific research into how these drugs can be used to treat liver and kidney diseases. The excitement has been rekindled by these new developments. Recently, analysts have revisited their models to see if the projections were too optimistic or if the potential of the category was underestimated. Guggenheim analyst Seamusfernandez wrote a note on Tuesday explaining how the market size for these incretin drugs, as they are called, could reach $150 billion or $200 billion. Fernandez stated that “we reiterate our BUY rating on both LLY.B-CSE and NOVO.B.CSE because of the strength of the conviction we have in the respective GLP-1 brands of the companies and our growing belief that GLP-1-based incretins may be the most prescribed pharmaceutical class ever by 2031 or earlier.” He raised his Lilly target price to $620, up from $474. This represents a nearly 8% increase from the closing Friday share price. The LLY shares of mountain Eli Lilly have surged in value year-to-date. Morgan Stanley analyst Terence Flynn said Thursday that his latest analysis shows the bull case for worldwide sales of Eli Lilly’s Mounjaro to reach $65 billion in 2030. Flynn had previously predicted that sales would be $44 billion during this time frame. Mounjaro (also known as tirzepatide) is expected to be approved by the Food and Drug Administration for treating obesity before the end of the year. Already, the drug is available as a treatment for type 2 diabetes. NVO YTD Mountain Novo Nordisk became Europe’s largest company recently. Shares of Novo Nordisk, Eli Lilly and other companies were already rising before this week’s optimistic forecasts. The shares of Novo Nordisk in the United States, which has recently become Europe’s largest company, have risen by nearly 41% this year. Lilly’s share price has risen 57% by 2023. FactSet reports that both stocks are trading at prices above their average target price. Buy the Fear: The success these companies have enjoyed has been bad for a number of medical device stock. Dexcom and Insulet, for instance, produce continuous glucose monitors and pumps. Insulet shares have fallen 42%, while Dexcom’s are down nearly 15% by 2023. William Plovanic, Canaccord Genuity’s analyst, urged his clients on Monday to “buy into the fear.” “Our conclusion is that the near-term impacts are minimal to non-existent and that long-term effects cannot be determined due to a lack of data. Plovanic wrote that we should buy at the drop, particularly diabetes names DXCM or PODD. These sentiments have been echoed by other analysts, but the medical device stocks continue to decline. DXCM 3M Mountain Dexcom has struggled to hold onto its shares in recent weeks. Plovanic’s opinion is based on a number of factors. He mentioned the high costs of GLP-1 medication and the fact that in real life — not clinical trials, there is a significant drop-off rate among people who take the drug. He said that despite the fact that all participants had insurance, only 32% of the obese patients who began taking GLP-1 RAs (12 months after starting the drug) continued to take it. This was based on an analysis of the pharmacy benefits manager Prime Therapeutics. The reason for these people stopping treatment is unknown. The trend suggests that some people regained weight while on therapy. Plovanic stated that in a cardiovascular study, two thirds of the participants’ weight returned 12 months after stopping their drug treatment. He said that the drugs are expensive, and most patients stop taking them after a year. If you stop taking the drug, the benefits will be reversed in the majority of patients. Plovanic says that all of this means there’s still money to be made for companies like Dexcom and Insulet. It is hard to ignore Even though it’s still early, the overlaps in obesity, overweight, and illnesses like sleep apnea, heart disease and other conditions are difficult to ignore. These diseases together represent a huge market. A company would only need to treat a small portion of this to realize large sales gains. GLP-1 medications have already gained market share. Iqvia BrandImpact, a data provider, shows that GLP-1 medications account for about 30% of all brand-new diabetes prescriptions. Comparatively, 23% of diabetes prescriptions go to drugs in this group. Fernandez’s projection was based on the assumption that GLP-1 sales would reach $50 billion by 2020, when incretin medication becomes standard care for diabetes patients. GLP-1 is glucagon like peptide-1 agonist. The drug mimics incretin, a hormone released by the gut. It stimulates insulin production, slows down how fast food leaves the stomach, and creates an satiety feeling in the brain. The second incretin, known as GIP or gastric inhibitory peptide (GIP), has similar effects. These characteristics have helped type 2 diabetics regulate their blood sugar levels, and helped them lose weight. On occasion, doctors have also observed a drop in blood pressure and cholesterol levels. However, it is unclear whether this is due to the medication or weight loss. Also, it appears to reduce inflammation. Fernandez estimates that the total market for obesity support is $140 billion. He believes that GLP-1 drugs could become widely available and common, just as statins lower cholesterol. Fernandez, in a research report, wrote that it might seem absurd to compare obesity treatment with statins. However obesity is a visible condition that can lead to higher adherence and persistence rates than oral diabetic drugs that don’t affect weight or silent diseases such as