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Novo Nordisk, Eli Lilly Obesity Drugs Could Be Game Changers

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·2 min read
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- By Barry Cohen

Novo Nordisk AS (NYSE:NVO) and Eli Lilly and Co. (NYSE:LLY) are testing unique weight-loss drugs aimed at tackling the growing problem of obesity and beefing up the top and bottom lines of both pharmaceutical giants.

The medications are in a class called incretins, which appear to help patients lose enough weight to improve their health and make them feel better about themselves, according to a New York Times article. Studies show incretins have substantial advantages over other weight-loss drugs. One big one is that they are naturally occurring hormones that affect systems central to obesity.

The incretins slow stomach emptying, regulate insulin and decrease appetite, with mostly mild to moderate short-term gastrointestinal side effects. The current obesity drugs lead to an average weight loss of only 5% to 10%. But because some of these treatments can only be used for a limited time, people almost always gain back the pounds they shed when they stop taking the medication.

The problem of obesity is huge and expanding as fast as waistlines. To be obese is to weigh on average about 50 pounds over the medium average weight. Statistics from the American Obesity Association show that 42% of Americans in 2020 are obese and another 35% are overweight. The organization predicts that by 2024, about half of all Americans will be obese and by 2030 the percentage jumps to 60%.

Obesity can cause serious health problems, including heart disease, strokes, type 2 diabetes, cancer, high cholesterol, high blood pressure, joint problems and sleep apnea. In most cases, the culprits are poor eating habits, not enough exercise and too much couch time watching TV or playing video games. There are other consequences too. People with obesity are more likely to be passed over for jobs, be paid less than others with the same qualifications and be treated poorly by doctors, reported the New York Times.

If approved, the Novo and Lilly drugs will compete in a global market that was estimated to be worth more than $6 billion in 2018, growing to $19 billion in 2026, according to Reports and Data. The Novo drug, semaglutide, is currently under review by the Food and Drug Administration, with a go/no-go decision expected next month. Lilly is still testing its drug tirzepatide, which combines two incretins. The company is analyzing it against semaglutide and hopes that it will be even more powerful.

Disclosure: The author has a position in Eli Lilly.

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This article first appeared on GuruFocus.