Obesity market predictions for 2024
Written by: Raluca Cenusa, Bill Coyle and Howard Deutsch
The buzz around novel obesity treatments including Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound, shows no sign of quietening down in 2024. Obesity was the most talked about therapy area at the recent 2024 J.P. Morgan Healthcare Conference, with recent M&A activity and a heaping pipeline of new drugs set to enter the space underscoring the size of the market opportunity. Will 2024 bring incremental innovations, increased payer coverage and supply improvements, or will we see more radical changes? Only time will tell. But in the meantime, here’s what ZS experts focused on obesity think is likely to happen.
1. BD activities heat up
2023 was a hive of BD activity not only for the dominant players in the obesity space but also those seeking to enter the market. Eli Lilly and Novo Nordisk made acquisitions to bolster their obesity portfolios, investing $1.9Bn in Versanis and $1.3Bn in KBP Bioscience, respectively. AstraZeneca acquired global rights to Eccogene’s ECC5004, an oral once-daily GLP-1 in clinical trials. The biggest deal in obesity in 2023 goes to Roche, which acquired Carmot Therapeutics along with its most promising target, a weekly GLP-1 injectable, for $2.7Bn.
The pie is seemingly big enough for multiple players, as several top pharma companies vie for potential licensing deals or partnerships to enter the obesity market and take on Novo and Lilly. Despite having two failed assets in the obesity space, Pfizer continues to advance trials of its once-daily pill, and CEO Albert Bourla has hinted at potential licensing deals or acquisitions of earlier-stage weight-loss drugs. Similarly, Bayer has expressed interest in exploring partnerships to enter the market, emphasising the importance of expertise. Here’s how Lilly’s CEO David Ricks described the current state of play at the 2024 J.P. Morgan Healthcare Conference: “If you’re sitting in a boardroom of a large drug company, you’re probably asking the CEO, ‘Where’s our obesity program?’ So they’re getting one…Some of them will succeed. Some won’t.”
Our prediction: All 10 of the top-10 pharma companies will have an obesity strategy in 2024. Some may acquire assets to enter the space, whilst others will keep a close eye on how growing usage of obesity treatments will impact adjacent businesses, for example aesthetics.
2. We’ll hear much more about innovation this year
Amongst the pipeline drugs in clinical trials, a variety of new mechanisms of action (MOA) and formulations are being explored, including oral drugs and combination therapies that aim to improve weight loss quality and reduce side effects compared with current therapies. There are several oral drugs in big pharma’s pipeline, including Lilly’s, Novo’s, AstraZeneca’s (through its acquisition of Eccogene) and Pfizer’s (through a partnership with Sosei Heptares). Small molecules are usually cheaper to manufacture and, for some people, present benefits in terms of convenience compared with an injectable. Amgen hopes to enter the market with a differentiated MOA, with Phase 2 asset MariTide, which could provide quicker and more effective weight loss as well as better weight-loss management. Novo announced a partnership with Omega Therapeutics to leverage Omega’s platform technology to develop an epigenomic controller intended to increase metabolic activity, the aim being to create a more sustainable weight-loss treatment approach for obesity. Lilly’s recent acquisition of Versanis added bimagrumab to its obesity portfolio, a monoclonal antibody that aims to reduce fat mass without affecting muscle mass and which is being studied in combination with Wegovy. Similarly, Regeneron’s combination therapy strategy focuses on improving the quality of weight loss and preserving muscle mass.
Our prediction: Given the flurry of research and increased investment into treating obesity, we will leave 2024 with a much better, deeper understanding of the science behind obesity. In a space where stigma, preconceived ideas and outdated thinking prevail, the scientific rigor will prove instrumental in aligning HCPs and payers on the need to solve the problem.
3. The supply and demand problem won’t be fully solved just yet, but the situation will improve
2023 saw shortages of Wegovy, Ozempic and Mounjaro; their surge in demand as a treatment for obesity resulted in restrictions on usage so as not to impact those that depend on them for Type 2 diabetes. Supply challenges will gradually ease with Novo announcing its investment of $6Bn to ramp up manufacturing of Wegovy and Ozempic. Novo’s parent company’s recent acquisition of Catalent (a key manufacturing subcontractor), signals the supply challenge is being taken seriously. Even before the launch of Zepbound, Lilly struggled with supply issues for Mounjaro. In the company’s Q3 earnings call, CEO David Ricks committed to “aggressively planning” further production buildup beyond investments in increasing production in its existing North Carolina manufacturing site as well as opening a new one in Indiana.
Our prediction: In the US, consumers will increasingly look outside of the traditional healthcare channels to access GLP1s, turning to the grey market and compounding pharmacies whilst supply and demand dynamics persist. We will begin to see robust self-pay markets develop for these drugs within public healthcare systems such as the UK and Germany, where there is little precedent for cash pay. Manufacturers will develop new go to market models to service these markets more directly.
4. Access will remain limited
Currently, anti-obesity medications (AOMs) are classed as lifestyle drugs and, as a result, are not covered by Medicare by law, whilst Medicaid only provides coverage for adults with low income in 16 states. Only 22% of commercial payers covered AOMs as of last March. Despite the reintroduction of the Treat and Reduce Obesity Act, it seems highly unlikely that policy changes will take place in the near term given the budgetary implications of broad AOM coverage. For a similar reason, we believe it unlikely that states will expand Medicaid. Commercial payers and plan sponsors will expand coverage only incrementally. Pharmaceutical manufacturers and patient advocates are working hard to secure access for these medications with plan sponsors, who must opt-in to coverage, and the momentum is growing. Still, we expect a single- to low-double-digit percentage increase in lives covered year over year. Even as coverage expands, it is likely premiums, out-of-pocket costs, and utilisation management (e.g., step-throughs, prior authorisations, demonstrated willingness to lose weight, limited coverage after weight loss plateau) will increase for health plan members, further exacerbating health inequities in obesity treatment and failing to cover the population’s unmet needs.
Our prediction: Population outcome agreements will become more prevalent in the U.S. and Europe, with increased clinical trial data on secondary prevention benefits of AOMs, such as Wegovy’s 20% reduction of serious cardiac events. Real-world evidence will be used to track outcomes in the highest risk and highest need populations and access carefully expanded to these groups at a significantly lower price than current list prices.
5. Risk of widening health disparities
The consequences of consumer demand heavily outstripping supply, combined with limited insurance coverage, will widen existing health disparities by creating a clear divide in who can and can’t access a GLP-1. Without insurance, monthly GLP-1 costs exceed $1,000. Considering the close link between socioeconomic status and obesity, the lack of coverage and prohibitive cost puts the treatment out of reach for many of those most in need of care. To add fuel to the fire, the ongoing social media and celebrity fanfare will not help to quell the perception that these drugs are for the wealthy, famous, and well-connected.
Our prediction: Whilst there is no clear way to resolve the coverage and supply issues affecting health disparities in obesity; alleviating these challenges are top of mind for healthcare executives. The situation will continue to put pressure on health systems and payers, and impact public perceptions of them. The health disparity issue will only be resolved over time with supply improving, increased competition, expanding sites of care (e.g., digital), and payers stepping up to treat obesity as a disease at a population-level.
6. Increase in holistic weight-management programs and partnerships
Despite the benefits linked to obesity drugs’ weight-loss results, it is clear that managing obesity long term goes far beyond the pill, and a holistic approach will be needed to maintain weight-loss results and a healthy weight. In March last year, WW International announced the acquisition of Sequence, adding subscription-based telemedicine/prescription services to its core nutrition and behaviour-change offerings. Telehealth provider Ro has launched its Ro Body Program, which provides access to prescription obesity treatments, personalised telehealth provider care, diagnostic testing with at-home sample collection and one-on-one coaching from nurses. Lilly launched LillyDirect, a direct-to-patient portal dispensing obesity medication through telehealth. We expect more activity in this field with integration of weight loss programs, telehealth and weight management apps set to provide more holistic and customised care solutions.
Our prediction: One of the big tech giants will make a play in obesity, leveraging data and AI to input into patient engagement as well as personalised treatment and support.
With these predictions in mind, it looks like one thing is sure in 2024: It will be imperative for the obesity leaders and new entrants alike to innovate, partner and think beyond the traditional coverage and commercial models to ensure broad access to their treatments.
These predictions were developed in consultation with ZS experts across industries and practices.
