On November 8, 2023, Lilly announced that its dual-target agonist tirzepatide injection (brand name: Zepbound™), which targets glucose-dependent insulinotropic polypeptide (GIP) and glucagon-like peptide-1 (GLP-1), received FDA approval. The drug is approved for treating obesity (BMI ≥ 30 kg/m²) or overweight (BMI ≥ 27 kg/m²) in individuals with weight-related conditions, such as hypertension, dyslipidemia, type 2 diabetes, obstructive sleep apnea, or cardiovascular disease.
Zepbound™ is the first and only dual-target agonist approved for weight loss, marking a major advancement in the GLP-1 weight loss drug market.
The approval was based on favorable outcomes from the SURMOUNT-1 and SURMOUNT-2 phase III clinical trials. Data from SURMOUNT-1, published in 2022, showed that participants on the maximum 15mg dose of tirzepatide lost an average of 24kg over 72 weeks, with positive safety results.
Figure 1. SURMOUNT-1 Data
The 2023 SURMOUNT-2 trial data revealed that tirzepatide was effective in treating patients with both type 2 diabetes and obesity. After 72 weeks on the highest dose (15mg), participants saw an average weight loss of 15.6kg. The safety profile was comparable to that of the SURMOUNT-1 trial.
Figure 2. SURMOUNT-2 Data
In summary, Lilly is conducting the SURMOUNT-1 to SURMOUNT-5 clinical trials to show that tirzepatide can significantly "surmount" semaglutide. Additionally, SURMOUNT-5 includes a head-to-head trial comparing the two treatments.
It is clear that Lilly has strong confidence in tirzepatide's weight loss effectiveness, and the clinical data has indeed met their expectations. In the SURMOUNT-3 trial, patients undergoing 84 weeks of treatment with the drug experienced an average weight loss of nearly 30 kg (26.6%). In comparison, the STEP-3 trial, which involved semaglutide and had a similar duration of 68 weeks, showed an average weight loss of 16%. Tirzepatide demonstrated superior performance.
While effectiveness is undoubtedly an important factor, pricing is equally crucial. Clinical studies involving semaglutide and tirzepatide have shown that patients often experience weight regain after discontinuing treatment, making long-term use necessary, which can strain patients' finances.
Lilly has set the price for Zepbound™ at $1,059.87 per month, which is 20% lower than semaglutide injections. The actual amount patients will pay will depend on their insurance coverage and any available discounts. Such significant discounts are rare in the innovative drug market.
Supply capacity is crucial for expanding sales. The current obesity treatment market is thriving, with many products available and rapidly changing market conditions; any stock shortages could result in losing market share. The ability to quickly increase production and capitalize on prime sales periods is essential for fostering a healthy "R&D-revenue" cycle.
The significant demand for GLP-1 drugs has led to supply shortages, prompting calls in various regions to prioritize semaglutide for diabetes patients. Belgium is considering a temporary ban on using the diabetes medication Ozempic for weight loss, reserving it for those with greater needs among diabetes patients. Additionally, the FDA has added tirzepatide's 10mg dose to its drug shortage database, with shortages reported since July 2023.
Figure 3. Semaglutide and Tirzepatide Continue to Show Signs of "Currently in Shortage".
Due to differences in production methods, Lilly is better positioned to address capacity supply issues. Tirzepatide is produced through chemical synthesis, which allows for easier outsourcing and scaling of production compared to semaglutide, which uses a fermentation and solid-phase synthesis approach. Novo Nordisk's choice to source all its raw materials in-house directly limits the production ramp-up speed of semaglutide.
Lilly's Chairman and CEO, Dave Ricks, stated at a news conference on Wednesday that the company’s production capacity will be double what it was at this time last year, thanks to the new manufacturing facility in North Carolina and the expansion of other production sites.
In terms of safety, the EMA recently ruled out a causal relationship between GLP-1 medications and pancreatic or thyroid cancer. Clinical data indicates that the most common adverse events associated with tirzepatide and semaglutide are gastrointestinal issues, such as nausea, diarrhea, vomiting, constipation, abdominal pain, indigestion, and gastroesophageal reflux disease; however, these side effects typically diminish over time.
Therefore, from any perspective, tirzepatide, which is characterized by its effective results, competitive pricing, and significant availability, has the potential to disrupt the weight loss market currently dominated by semaglutide. However, as pharmaceuticals are unique products, it's essential to focus on their intrinsic qualities and emphasize their selling attributes.
Even though tirzepatide shows impressive results, challenging semaglutide's dominant position in the weight loss market will not be easy. Lilly needs to overcome several obstacles, including changing physicians' prescribing habits, addressing price perceptions, and improving patient understanding. While they have built momentum in the initial stages, future performance will depend on effective market strategies and sales tactics.
According to the recent Q3 financial reports from Novo Nordisk and Lilly, semaglutide's weight loss injection, Wegovy™, generated $3,159 million in sales during the first three quarters, marking an astonishing year-over-year growth of 481%. In comparison, tirzepatide's diabetes injection, Mounjaro™, achieved $1,946.6 million in sales during the same period, with a quarterly growth rate of 44%. It is anticipated that once the weight loss version of tirzepatide is launched in the U.S. by the end of this year, its sales will accelerate even further.
Figure 4. Screenshot of Lilly's Q3 Financial Report
Why is the GLP-1 weight loss sector so booming? One significant reason is that the weight loss indication has transformed a traditionally serious medical field into one with "consumer product" characteristics. The pursuit of both external beauty and internal health has become a relentless goal for many in modern society. As the customer base expands, the overall market size continues to grow, driving the development of the entire industry and enhancing its overall prosperity.
According to Goldman Sachs, the weight loss market is projected to reach $100 billion by 2023. With the approval of tirzepatide, a competitive landscape is emerging, establishing a duopoly between Lilly and Novo Nordisk, which together are expected to control about 80% of the weight loss market.
In the competition within the GLP-1 market, Lilly and Novo Nordisk embody two distinct development paths: Lilly focuses on efficient research and development to disrupt the dominance of individual products in specific indication markets, while Novo Nordisk aims for complete market transformation, maximizing the value of its existing products.
Lilly's strategy emphasizes a deep exploration of indications, particularly in the combined areas of glucose control and weight loss. The company has placed its next growth opportunity on the triple agonist retatrutide, which targets GLP-1R, GIPR, and GCGR, demonstrating an average weight loss of 24% over 48 weeks, comparable to that of weight loss surgery.
Recognizing that oral formulations significantly enhance the consumer appeal of weight loss medications and expand the sales market, Lilly has opted to bypass the high technical barriers associated with developing oral peptide formulations. Instead, the company has bolstered its weight loss efforts by acquiring the small molecule GLP-1R agonist Orforglipron, which has shown promising results with an average weight loss of 30 pounds over 36 weeks.
Additionally, Lilly is actively exploring the weight loss potential of tirzepatide by collaborating with BioAge Labs to investigate the combined effects of oral Apelin receptor agonist Azelapra, aiming to achieve both weight loss and muscle gain benefits.
Overall, Lilly has established a comprehensive product strategy centered around GLP-1R, advancing progressively in both glucose control and weight loss. Novo Nordisk, on the other hand, has taken a different approach. Even with tirzepatide entering the market, the company has not yet identified its next major product but is instead focusing on maximizing the remaining potential of semaglutide by expanding its clinical development for broader indications.
In terms of horizontal expansion, Novo Nordisk is dedicating its internal research resources to the multi-indication clinical trials and approvals of its core product, semaglutide, targeting conditions such as non-alcoholic steatohepatitis, Alzheimer's disease, chronic kidney disease, and cardiovascular diseases. Recently, the company also plans to investigate the use of a combination of semaglutide and CagriSema for treating alcohol use disorder to fully utilize the product's capabilities.
For vertical expansion, Novo Nordisk intends to initiate the REIMAGINE 4 clinical trial using the combination of semaglutide and Cagrelatide, comparing it head-to-head with tirzepatide.
Looking ahead, it is anticipated that Novo Nordisk will develop more First-in-Class products, while Lilly will continue to introduce Me-Better or Best-in-Class products. Both companies will enhance the landscape of the GLP-1 sector, competing against each other while also driving each other's success.
