Dr. Tim Knoop, a family doctor from Cologne, has been treating patients with Wegovy, a weight-loss injection, for almost a year. The drug, developed by Danish pharmaceutical company Novo Nordisk, was originally designed as a diabetes treatment, but is now approved for use in overweight patients. Knoop considers the drug to be revolutionary. After several months, he looks into the grateful faces of his patients.

Weight loss medications generated plenty of stock market excitement last year. Novo Nordisk became the most valuable European company in the summer. However, since June, its stock price has nearly halved, and SAP has surpassed Novo Nordisk. Is the hype over? Not so fast, say some analysts, like Kay Eichhorn-Schott, a portfolio manager at Berenberg Bank: „We are still in the early stages of market development for weight-loss drugs“, he explains. „Before Wegovy's approval, the market was practically non-existent.“ In 2024, Novo Nordisk made over 8 billion dollars in revenue from the drug.

Rival Zepbound, a weight-loss drug from US competitor Eli Lilly, brought in 4.9 billion dollars in revenue in 2024. Analysts expect further growth for the product in the coming years. Eichhorn-Schott estimates the market's total potential at 100 to 150 billion dollars. Other experts give similar projections. „In a few years, the weight-loss drug market should be large enough that only the cancer drug market will likely be bigger“, says Eichhorn-Schott.

„In the US alone, there are over 100 million people with obesity“, adds Markus Manns, portfolio manager at Union Investment. Even if only a portion of them use weight-loss drugs, it creates a huge market. Moreover, the drugs are currently only available as injections, with research ongoing for oral pills. Once these become available, experts expect another boost for the market.

While there's optimism on one side, scepticism and caution are present on the other. Stock analyst Thomas Schiessle from EquiTS warns that expectations are already high. He also refers to these drugs as „lifestyle drugs“ and notes that it's important to consider who these drugs are for.

Dr. Knoop tries to dispel this stereotype by describing his patients: individuals with a long history of suffering, severely overweight, and usually between 30 and 60 years old, still in the workforce. However, when news spreads that Elon Musk has lost weight using one of these injections, it creates a different impression. But there is one thing Knoop’s patients have in common with Musk: they must pay for the treatment themselves. The medical professional calculates that patients should expect to pay between 170 and 270 euros per month, depending on the dose. Additionally, nutrition counseling is required. He also mentions that many of his colleagues remain cautious, even though Wegovy has been tested as a diabetes medication. The only difference is the name: Novo Nordisk markets it as Wegovy for obesity, while diabetes patients receive the same drug under the name Ozempic.

The active ingredient is sold not only under different names but also at different prices. Schiessle explains that the high costs of medical research are behind this price discrepancy, and the companies pass these costs on to consumers. This price difference has led to Ozempic being traded on „semi-medical platforms“ on the internet, notes Professor Dr. Baptist Gallwitz from the German Diabetes Society. Gallwitz refers to this as a „grey market“, which has caused some diabetics to be unable to obtain their medication. „A shortage still exists“, states Gallwitz.

From an analyst's perspective, capacity issues are also a problem for Novo Nordisk's stock price, along with existing competition and disappointing study results for the follow-up drug, Cagrisema. „It's the first time in the pharmaceutical industry that growth is being slowed by production bottlenecks“, says Eichhorn-Schott. The company acquired new filling facilities. Bottlenecks occurred both in the syringe filling process and in the materials required for production. „Capacity issues are still an issue for Novo Nordisk", he says. This is also the reason why the oral version of Novo Nordisk's drug has yet to be commercially available: more active ingredient is needed for pills than for injections, and this simply isn't possible at the moment.

„The market is concerned because Wegovy prescription data in the US aren't rising, while Eli Lilly's competing product, Zepbound, has shown significant growth since the beginning of the year“, adds Manns. This could mean that Zepbound is gaining market share or that Novo Nordisk still has capacity constraints. The study results for Cagrisema were also poorly received by the market. „The data wasn't that bad“, Eichhorn-Schott explains. „But market expectations were simply higher.“ According to studies, Cagrisema is better than its predecessor, Wegovy, but only as good as Eli Lilly's Zepbound.

Eli Lilly appears to be handling supply issues better. The company saw the high demand and made preparations in time, explains Eichhorn-Schott. Eli Lilly itself states that it is currently executing the most ambitious expansion agenda in the company’s history. „Since 2020, we have invested more than 50 billion dollars in building, expanding, and acquiring facilities in the US and Europe.“ The expansion also benefits a location in Rhineland-Palatinate: the US pharmaceutical giant is building a production facility in Alzey, in the Rheinhessen region, where it will produce diabetes and obesity injections.

Germany has little involvement in this field: publicly listed German pharmaceutical companies active in this market are hard to find. That is no surprise to experts, as the origin of these drugs lies in the diabetes medications. There are a few companies that have been leaders in this field for a long time – primarily Novo Nordisk and Eli Lilly. „The rivalry between the two has existed for about 100 years in this area“, states Eichhorn-Schott. Entering such a market in the short term is expensive and takes time. „For this reason, we are currently seeing more partnerships between large pharmaceutical companies and specialized biotech firms.“

A recent example of how other pharmaceutical companies want a piece of the pie through collaborations is the Swiss pharmaceutical giant Roche. Recently, Roche announced a partnership with Zealand Pharma, another Danish company also researching in this field. Initially a costly deal for Roche, analysts believe it could pay off. Investors seem to agree, as Roche's stock jumped significantly. It is up 20% since the beginning of the year. With Roche involved, Manns believes another strong competitor could emerge.