GLP-1 and Keytruda steamed ahead in Q3
The report season is in full bloom. In the Big Pharma space, diabetes and obesity remain in focus during the third quarter, while world leader Keytruda enjoys a continued success story. BioStock has taken a closer look at the period.
This year, much has revolved around the seemingly insatiable obesity market, with the brightest shining stars, Eli Lilly and Novo Nordisk, at the forefront. For Eli Lilly, however, Q3 turned out to be a bit of a disappointment, causing the stock to drop. Sales of the bestsellers Zepbound and Mounjaro did not meet expectations, and the company was forced to lower its forecasts for the full year.
Both Eli and Novo have long struggled to meet the high demand for their obesity and diabetes products and are, therefore, making major investments in increased production capacity. However, Eli Lilly’s CEO David Ricks emphasizes that the disappointing sales are not a result of strained production. Rather, he says the increased capacity has prompted customers to buy large inventories, which they grazed on during the third quarter. According to Ricks, the underlying demand for the products is still high.
Increased production boosts teeth-grinding
The increased production has one additional upside. The FDA recently removed tirzepatide – the active ingredient in Zepbound and Mounjaro – from its so-called “shortage list”. If there is a shortage of a drug, to the point that the drug is listed here, it allows other players to develop their own products based on otherwise patented substances. These copies are often cheaper than the originals due to lower development costs for generics, and they can thus steal large market shares. With the FDA’s maneuver, however, that door is closed on tirzepatide, much to the chagrin of Eli’s competitors.
Criticism from competitor
On the other hand, Novo Nordisk made headlines when the parent company announced the acquisition of contract manufacturer Catalent for USD 16.5 billion. The acquisition is intended to secure Novo’s production of GLP-1 inhibitors. The deal is so bolt-on that the authorities are investigating whether the company would gain too dominant a position in the market.
In the report release, Roche CEO Thomas Schinecker made a fiery comment:
“Restricting competition in this area is not a good idea,” he says. “The acquisition would further limit the contract manufacturing ecosystem, which could be a problem for other smaller players.”
In its Q3, Novo Nordisk refrains from mentioning the Catalent turmoil. An EU decision on the matter is expected by 6 December.
Reports as expected
For the third quarter, however, the Nordic diabetes and obesity giant reported broadly in line with expectations. Sales landed just north of DKK 71 billion, a growth of about 20 per cent compared to the same period in 2023. Unsurprisingly, the obesity treatment Wegovy is the driving force, with a growth of almost 80 per cent.
Demand is increasing, and Novo is also investigating the potential of GLP-1 agonists outside current indications. The company recently announced results showing that semaglutide – the active ingredient in Wegovy and Ozempic – reduces the risk of cardiovascular problems in patients with type 2 diabetes. The substance has also been shown to have potential in liver fibrosis and NASH and an early study shows potential in preventing Alzheimer’s.
In connection with the report, Novo Nordisk’s CEO Lars Fruergaard Jørgensen said he is very pleased with the results. The market seems to agree, and the stock is trading up almost 8 per cent.
Leqembi sells better and better
Staying in the Alzheimer’s space—and Swedish based BioArctic-developed Leqembi—the marketing partner Biogen reported strong sales of the drug in Q3. Since its approval in 2023, the product has had some concerns with reaching the patients, primarily due to investments in the infrastructure needed for the treatment. Recently, however, it seems to have eased up. Sales in Q3 amounted to USD 67 million, well above analysts’ average expectations of around USD 50 million.
Continued kings on the hill
Despite all the above, Johnson & Johnson maintains pole position among the world’s largest pharmaceutical companies. The company’s cancer segment is leading the way—growing by 19 per cent in Q3, driven by strong sales of the myeloma treatment Darzalex.
Cancer also drives sales for Merck, which continues to carve gold with Keytruda. The PD1 inhibitor was named the world’s best-selling drug in 2023, an award that is expected again this year. During the third quarter, the cancer drug sold for nearly USD 7.5 billion, a growth of as much as 21 per cent compared to last year. The strong performance of Keytruda contributed to Merck’s sales exceeding analysts’ forecasts.
The company also highlights the success of its recently approved drug for pulmonary hypertension, Winrevair, which generated revenue of as much as USD 149 million during the quarter.
AstraZeneca under scrutiny
On Tuesday, our Swedish representative among Big Pharma, AstraZeneca, will release its Q3 report. The company was recently highlighted due to Chinese authorities investigating Astras local chief. The stock took a significant dive on Tuesday after reports that the investigation had been expanded. Whether the debacle will be highlighted in the quarterly report remains to be seen, but we will probably have reason to return to the issue.
