The Return of Blockbusters in Pharma: Weight-Loss and Diabetes Drugs in Heavy Demand
Glucagon-like peptide-1 (GLP-1) receptor agonists have revolutionized how patients manage Type-2 Diabetes and obesity. “What makes these drugs so unique from a marketing perspective is the consumer pull — consumers approach their physicians requesting a prescription. With most pharmaceuticals, that goes the other way around,” says Singularity Think Tank (STT) expert and former cardiac surgeon Erik Kuntze, MD.
Spurred by celebrities talking openly about their pharma-supported weight loss journey, the drugs have gained significant attention. Shortly after long-term “Weight Watchers” enthusiast Oprah Winfrey sold her shares of the company, the talk show host aired an hour-long special on weight loss drugs, sharing the stage with executives of the two leading companies in this field.
While media craze is no innovation indicator, STT experts confirm the unique blockbuster status and innovative nature of this class of drugs. As a result, with the most recent rebalancing of the Singularity Strategies, GLP-1 drugs and their value chains came into focus. Novo Nordisk (SI-Score: 72) has been at the forefront of addressing the substantial market demand for GLP-1 based therapies, notably with its Ozempic treatment for Type 2 diabetes and its Wegovy treatment for obesity. Competitor Eli Lilly (SI-Score: 45) has equally demonstrated strong growth for its Zepbound obesity drug and Mounjaro Type-2 diabetes drug.
The move into GLP-1 drugs is further supported by continued evidence of market growth opportunities (see figure below) and therapeutic advancements. “The pharmaceutical industry is widely perceived as being very innovative,” TSG Director of Research Shiko Ben-Menahem, PhD, says. “However, blockbuster drugs have become increasingly rare over the past decades as the ‘low-hanging fruits’ of therapies for many other prevalent diseases have been harvested. Discovering drugs for the mass market has become a rarity.”
Taken by surprise
Underpinning the large demand for GLP-1 agonists are demographic mega-trends such as an aging population, changing dietary patterns associated with economic development, and sedentary urban lifestyles. Jointly, these patterns contribute to increasing prevalence of obesity and Type-2 diabetes. “Although it was clear that the addressable market is huge, the pharmaceutical companies leading this space were taken by surprise by their own success, resulting in unprecedented challenges in meeting market demand,” explains Dr. Andreas Schneider, Singularity Think Tank expert and Head of Innovation Delivery Systems at Ypsomed AG, a leading producer of injection systems for self-medication.
In trying to meet the large demand, GLP-1 producers faced considerable challenges in securing supplies of drug delivery components. To strengthen its market position and ensure robust manufacturing capabilities, Novo Nordisk recently announced its acquisition of Singularity Index constituent Catalent (SI-Score: 46), thereby securing independent capacity to fill subcutaneous injection pens under sterile conditions (“fill-finish”). “With demand surging, the whole value chain benefits currently,” notes Schneider. “Innovations addressing patient needs are on the agenda but the real focus is now on ramping up capacity.”
“Beyond marketing GLP-1 agonists for the treatment of diabetes and weight loss, these companies are now building additional evidence of treatment effects in a growing number of related disease indications, including cardiovascular disease, obstructive sleep apnea, and comprehensive metabolic management.” For example, the FDA recently approved Novo Nordisk’s Wegovy to help reduce the risk of cardiovascular death, heart attack and stroke in people with higher BMIs. This broadening of disease indications is likely to convince healthcare payers of the value of GLP-1 offerings. Moreover, future innovations in formulations (e.g., higher concentrations) and delivery methods (e.g., oral administration or long-acting injections) are likely to focus on meeting a broader range of patient needs and preferences, and will continue to drive demand.
About The Singularity Group
The Singularity Group (TSG) quantifies applied innovation for investors in listed equities. TSG is the initiator of the Singularity Index™ (Bloomberg ticker: NQ2045), a global, all-sector benchmark and gold standard for applied innovation. The Singularity Strategies include The Singularity Fund (UCITS Lux), Singularity US Innovation Leaders (AMC), Singularity Small&Mid (UBS AMC), Singularity Reindustrialization (UBS AMC), and LUKB Smart Farming (AMC). The Swiss investment advisory boutique works closely with the Singularity Think Tank, a network of entrepreneurs and academics with deep insights into innovation value chains. Their input forms the foundation of TSG’s proprietary innovation scoring system that quantifies the engagement of companies within a set of curated Singularity Sectors worldwide across all market capitalizations and industries. The Singularity Innovation Score (SI-Score; see below) defines how much value listed companies are generating through applied innovation.
The Singularity Innovation Score (SI-Score): A company’s SI-Score represents the percentage of its revenues associated with innovation. It reflects a company’s ability to create innovation- versus commoditized -business and -cash flows, and its ability to participate in technological evolution. Changes in the SI-Score are just as important as the absolute value. A company’s SI-Score relative to its overall GICS sector can say a lot about the competitive standing and ability to gain and maintain market share. Regional SI-Scores can be used to evaluate the innovation power of markets as well as to gauge companies’ standing in different regions.
