What’s News in Earnings: How Big Pharma Is Expanding the GLP-1 Market

0:00Peter Loftus:Hey, this is Alex from What's News. Thanks so much for being a listener of the show. If you're looking for more insights and tools to understand the latest headlines, consider becoming a subscriber to The Wall Street Journal. Visit subscribe.wsj.com slash what's news to subscribe now.

0:22Peter Loftus:Hey, listeners, it's Friday, May 8th. I'm David Wainer for The Wall Street Journal, And this is What's News in Earnings, our look at some of the biggest themes standing out this earnings season. The weight loss drug market is still growing faster than Wall Street expects. Industry leader Eli Lilly last week reported results that blew past analyst estimates, and the company raised its forecast for sales this year. And that was mostly because of consumer demand for its GLP-1 injections. Meanwhile, Novo Nordisk said the prescriptions for its new Wagovi pill are off to a strong start. That showed that people around the world just can't get enough of weight loss drugs, with growing demand for the pills as well as the injectables.

1:05Peter Loftus:Elsewhere in pharma, companies are mostly delivering positive results, with Merck, Bristol-Myers Squibb and AbbVie all posting earnings beats. But investors are still debating the durability of their long-term growth.

1:25Peter Loftus:We're joined now by Wall Street Journal reporter Peter Loftus, who covers the pharmaceutical industry. Peter, where do things stand in the whole pill versus pill battle? Basically, Novo's oral would go be going up against Lily's Fondeo. Is there a clear winner emerging, or is it still too early to call?

1:44David Wainer:Right now, you'd have to say Novo Nordisk has the edge. Their Wegovi pill really has had one of the fastest launches of any drug in pharma history. They've already had more than a million patients using it just since January, since it came out. Of course, it did get a head start on Eli Lilly, whose Fandaio came out in April. But even if you adjust for the timing of the launch, it's clear that the Wegovi pill was doing better. And there's a couple of reasons for this. One is that the Wegovi pill showed stronger efficacy in trials than Fandaio did. And also the Wegovi pill is using this established brand name that we first saw five years ago when the injectable version came out.

2:25David Wainer:Whereas Fondeo is a brand new brand name. It's less familiar to consumers. Now that said, Lilly hasn't really started the consumer promotion like TV ads and more. And a lot of analysts think that Lilly will have an edge when it comes to rolling this drug out internationally outside the U.S. and having a big enough supply to be able to meet all that demand because it's actually a lot easier for Lilly to make a lot of its pills than it is for Novo Nordisk. One other interesting aspect for both of these companies is that the pills seem to be expanding the market for weight loss drugs overall rather than just taking business away from the shots.

3:05David Wainer:And that sort of validates the whole premise that the companies had for developing pills in the first place was they felt there was a large untapped market of people who would just prefer a pill for weight loss.

3:15Peter Loftus:But aside from the pills, the reports showed that injections are still the main business and international markets are expanding. How do we think about the growth path from here? And what are risks investors should be watching for?

3:28David Wainer:Yeah, I mean, Lilly's results showed that sales of Monjaro, which is for both diabetes and obesity, more than doubled. And it's probably on track to being the highest selling drug in the world. ZepBound, the weight loss version of this in the U.S., was up something like 80%. There's still an expectation of just strong continued growth for these drugs in both shot and pill form. The one thing that's changing, and I guess you could call this a risk for investors, but maybe good for consumers, is that the pricing has been coming down in a pretty remarkable way. These drugs started with list price of$1 ,000 a month or above.

4:06David Wainer:Now they're coming down to as low as$149 a month. That big price reduction is going to put a damper on overall sales, so much so that some analysts have actually reduced their estimates of the overall market size for obesity drugs. Novo Nordisk is actually predicting its overall sales will decline this year. So the companies have basically accepted this tradeoff of price for volume. Let's switch gears.

4:33Peter Loftus:Another massive market is the autoimmune space. Think of all those ads for clear skin or joint pain. The market for drugs that treat conditions like psoriasis and Crohn's has gotten incredibly competitive. The big fear here for the leader, AbbVie, has been J &J making inroads with its spills while AbbVie tries to defend its turf with its injections. Did AbbVie's results this week put those fears to rest?

4:59David Wainer:There was a lot of concern the first few months of the year that Johnson & Johnson would really take market share with not only its new pill, but also another injectable drug. But it turned out that AbbVie's autoimmune drugs, they had solid sales growth for this past quarter. And in fact, it was better than expected. AbbVie actually raised its sales guidance for its two main autoimmune drugs, Skyrisi and Rynvok. Certainly, J &J, you can't count them out because they've also been a strong leader in autoimmune drugs. But I think that there's a sense that AbbVie will be OK.

5:33Peter Loftus:That was Peter Loftus, Wall Street Journal's pharma reporter. Thank you so much for joining us.

5:38David Wainer:Thanks for having me.

5:39Peter Loftus:And that was What's News in Earnings. Today's show was produced by Danny Lewis with supervising producer Tali Arbel. Later today, we'll have the PM edition of What's News out for you as usual. And we'll be back later this earnings season diving into another industry. Until then, I'm David Wehner. Have a great day.

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