How GLP-1 weight loss drugs dominated 2023

Coming in at Number 5 on Yahoo Finance's countdown of the top stories of 2023 is the breakout success of GLP-1 weight loss drugs. This new class of diabetes and obesity medications, led by Novo Nordisk's Wegovy (NVO) and Eli Lilly's Mounjaro (LLY), have shown dramatic weight loss results of 15-20% in clinical trials.

Yahoo Finance Health Reporter Anjalee Khemlani provides an in-depth analysis of the frenzy over these injectable treatments and what's driving the demand. As major pharmaceutical companies like Pfizer (PFE) and Roche (ROG.SW) prepare to enter the market in 2024, she explores what lies ahead.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video transcript

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- We're counting down the top 10 stories of 2023 here at Yahoo Finance. And coming in at number 5, the weight-loss drug craze.

- Pfizer is entering the weight-loss drug space for the first time.

- Pharma companies Novo Nordisk's, Eli Lilly, and Pfizer are all competing to seek FDA approval of a first in class oral weight-loss and diabetes drug.

- The skyrocketing success of weight-loss drugs like Ozempic has completely upended the $75 billion weight-loss industry.

- Prescription weight-loss drugs in a new study coming out from Goldman Sachs saying that they think the total addressable market globally by 2030 could be $100 billion.

COLLEEN LINDHOLZ: From knowing people that are on those drugs, it's their blockbuster for them, especially if they've tried diets over the years and more of like a kick start in a new lifestyle.

- 2023 was the year more drug companies got in on obesity drugs following the rise in popularity of GLP-1s for diabetes and weight loss. Here with how it all unfolded, we have Yahoo Finance's Anjalee Khemlani. Anjalee.

ANJALEE KHEMLANI: Thank you so much guys. Obviously, weight-loss drugs, GLP-1s in particular were literally everywhere this year from swimsuit season through Thanksgiving. There's literally always a news peg for it. I was never bored. They even had a moment at the Oscars.

- When I look around this room, I can't help but wonder, is Ozempic right for me?

ANJALEE KHEMLANI: And just today, after months of not confirming, Oprah Winfrey acknowledged that she was indeed using a weight-loss drug as a maintenance tool but without naming which one. But first let's address the important difference. There's type 2 diabetes drugs and weight-loss drugs that make up the class of GLP-1 drugs. And that has caused the stir.

The diabetes drugs are Novo Nordisk's Ozempic and Eli Lilly's Mounjaro which are both available off-label for weight loss. GLP-1s have been around since 2005 with Eli Lilly's [INAUDIBLE]. But the newer drugs have set a new bar for weight loss. Novo's drug provides up to 15% weight loss with semaglutide. And then Lilly's drugs in higher doses of tirzepatide can help a person lose more than 20%. So that is really what has started the buzz around the potential drugs.

In addition, they could potentially help with heart disease risk and other health issues like liver disease, kidney disease as well. And this has really been what has opened the door to greater insurance coverage potential, which is currently the biggest barrier as insurers worry about the sudden spike in costs for a drug that has a potential market of 50% of the US population. The reality is that the drugs are only used by about 1% of the market right now, projected to be a $100 billion industry by 2030 as you just heard.

And then there's the worry that these drugs will also impact food, beverage, and basically everything else from airlines to clothing due to the loss of appetite, addictive snacking, and drinking as well as smaller waist sizes. So the catalyst to the change was Novo Nordisk, which is why we named them company of the year. It's the first time a drug like this has had the potential to impact such a large market. And it is the first time the Danish drugmaker which has really only been known for insulin for the longest time has something else to brag about.

LARS FRUEGAARD JORGRNSES: It's a big change. I've been with the company for more than 30 years. I'm only the fifth CEO in a 100-year-old company. And now we're growing around 30% 100 years into our lifetime. And suddenly, we have brands that are becoming household names. And we've never ever had products that were widely known.

ANJALEE KHEMLANI: And Lars Jorgensen also told me that he's not sure the drug will have such drastic impacts on other sectors, but they could move the needle just a little.

LARS FRUEGAARD JORGRNSES: My view is that some of those reactions are perhaps a bit exaggerated. But there's no doubt that with the intervention we see now with the GLP-1 based medicines you see significant shift in consumer behavior. And some of these categories will be impacted.

ANJALEE KHEMLANI: So all told, the story is just beginning.

JULIE HEYMAN: OK. So if it is just beginning, then what should we be looking ahead to in 2024 in this story?

ANJALEE KHEMLANI: You definitely have more competitors in line. Eli Lilly nipping at Novo's heels with Zepbound just being approved. We've got Pfizer with its oral option. Lilly also working on an oral option. Roche and Amgen and others getting in or back into the race after having abandoned GLP-1s in the past. So that's really where the things are. But everyone keeps saying that Lilly and Novo are really the market contenders for the year.

And you're talking about these two companies already making billions of dollars this year alone. I think Novo made somewhere in the ballpark of $12 billion off of these drugs upgrading guidance three times. So you're looking at a really hot market right now. You have these strong drugs to contend with. And what could potentially be more than that? That's the question that remains. If you already have such improved weight loss, what's next? What else can you do to differentiate yourself in this market?

- Now, Anjalee, you mentioned some barriers. Insurance coverage is one of the needles or another. People don't like needles. You mentioned some oral options in the pipeline, Pfizer, and others. Do we have any timetable on when those might hit?

ANJALEE KHEMLANI: Pfizer saying that their oral option could come out next year. So that's what we're waiting on. We know that it's in late stage trial waiting for a readout early next year. And that's something that analysts are really waiting on. They did have a bit of a setback in their testing looking at a once a day option to move forward rather than their twice a day because there were some issues. So that's really what's on the line for them.

And the price, of course, is going to be a differentiator. Right now, if you've seen on your screen before, the monthly price of these drugs is near $1,000 or over $1,000. There it is. $13,000-- $1,300, sorry, for Wegovy per month. And then Zeppelin came in at a bit of a discount to try and compete and convince employers in particular to cover these drugs.

So that is one of the things that we're going to have to see is, do all of these factors do the other diseases that it can help, do the reduced prices help insurers say, OK, maybe we do need to cover this?

JULIE HEYMAN: And we're talking in some cases about a lifetime commitment to these drugs. Thank you so much Anjalee Khemlani, appreciate it.