Novo Nordisk and Eli Lilly set to face new challenger in weight-loss race

Other drugmakers could still “win” the race in the rapidly growing obesity market dominated by Novo Nordisk and Eli Lilly, according to the chief executive of biotech company Zealand Pharma.

The claim by Adam Steensberg follows a 100 per cent surge in the company’s share price in the past year as investors bought the stock thanks to the potential of its anti-obesity drugs.

Zealand’s products in development will have to compete with the popular Wegovy and Zepbound drugs already on the market and made by Novo Nordisk and Eli Lilly respectively, which suppress appetite.

However, Steensberg stressed his company, which joined forces with German pharma group Boehringer Ingelheim more than a decade ago to develop a weight loss drug that is now in late-stage trials, wanted to partner with other groups for future treatments rather than sell to a large company.

“We are not interested in people looking to catch up . . . It’s about joining forces with someone who has a strategy of how they would win in obesity,” he told the Financial Times. “I think it’s a big misperception to say others are too late. This is just the start.”

A number of celebrity endorsements and the success of Novo Nordisk and Eli Lilly’s treatments in helping users lose weight have made the drugs hugely popular, sparking supply shortages.

This has proved lucrative for the companies. Trial results in November showing that Wegovy cut the risk of death by 18 per cent helped Novo Nordisk become Europe’s largest drugmaker by market capitalisation last year.

With more products to come on the market in the years ahead, Goldman Sachs researchers say the weight-loss drugs market could grow from $6bn to as much as $100bn by the end of the decade.

Despite Novo Nordisk and Eli Lilly’s lead, Steensberg believed there was space for others to develop weight-loss products. “There are 220 diseases that you can associate with obesity . . . in the future, there needs to be more choices,” he said.

Investor excitement about Zealand comes as pharma groups seek to follow Novo Nordisk and Eli Lilly into the lucrative obesity market.

Swiss company Roche acquired obesity drug developer Carmot Therapeutics for $3.1bn last month, while AstraZeneca signed a $2bn licensing agreement with Eccogene, a Chinese maker of an oral obesity drug in November.

US rival Pfizer in December abandoned plans for a weight-loss pill to be taken twice a day after trials showed significant side effects.

Boehringer and Zealand are also testing their weight loss treatment survodutide, a GLP-1 or glucagon-like peptide 1 agonist drug similar to Wegovy, for its effectiveness in tackling NASH, a chronic liver disease that is estimated to affect up to 6.5 per cent of US adults.

Zealand expects about 10 per cent royalties from potential sales of the weight loss drug. The company, valued at $4bn, is also developing alternative treatments — based on a hormone called amylin — that promotes a feeling of fullness after eating, rather than suppressing appetite.

“GLP-1s reduce your appetite. You turn up at the buffet and you say you can’t eat anything because you don’t have any appetite. That’s not the most pleasant experience. Amylin works on satiety . . . it’s a different way to induce less calorie intake,” Steensberg said.

Steensberg said early-stage trials of the drug suggested it could achieve similar weight loss with reduced side effects of vomiting, nausea and constipation associated with GLP-1s, generating more excitement among investors.

“Within one year, probably 20 to 30 per cent of users of GLP-1s drop off due to these side effects,” said Steensberg. “Even though you have patients with a good experience, one drug doesn’t fit everyone.”

Further positive trial results could spark more interest in the company. One banker following the sector said Zealand’s amylin treatment was “one of the most advanced” in development and would make it an attractive acquisition target.