New weight-loss drugs offer solution to the obesity crisis

A new generation of weight-loss drugs has the potential to fight the obesity epidemic. Regnan analyst MAXIME LE FLOCH explains more

• Obesity affects one billion people worldwide
• New treatments are showing much greater efficacy
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DEMAND for a new generation of weight-loss drugs such as Novo Nordisk’s WeGovy is soaring — particularly in the US where demand is outstripping supply.

Bloomberg estimates global sales of branded anti-obesity drugs could hit $US44 billion by 2030.

While medications are not the only solution required to combat obesity, “they are one revolutionary step forward in countering the epidemic” noted Scientific American recently.

Some doctors say drugs like Wegovy “could help stem a tide of weight-related conditions such as heart disease or joint pain”.

Sustainable investing leader Regnan, which is part of the Pendal (and now Perpetual) family, is a long-term investor in Danish pharmaceutical group Novo Nordisk.

“We like companies that have a relentless pursuit of continuous innovation,” says Maxime Le Floch, an analyst with Regnan Global Equity Impact Solutions fund.

“We want companies that innovate, have brand awareness and can build a market from scratch,” says Le Floch.

Novo Nordisk develops treatments for serious chronic illnesses such as diabetes and obesity. The two are linked, though obesity is becoming a greater health risk.

A potential treatment for obesity

More than 700 million people are obese — of which around one-third are children, according to the World Health Organisation. 

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In the United States alone, more than 40 per cent of adults are obese, and nine per cent are severely obesity.

“Ninety per cent of people with obesity have weight related comorbidities … and half have a combination of health conditions such as diabetes, higher blood pressure, coronary heart disease and risk of stroke,” Le Floch says.

“There’s also increased risk of kidney cancer and colon cancer, digestive problems, liver problems and sleep disruption.”

It has become a major cost to economies with eight per cent of healthcare budgets spent on obesity related medical conditions, Le Floch says.

“Until now there have been two main treatments for obesity – weight loss programs which are difficult to put in place, and the average weight loss is just 5 per cent.

The other option is bariatric surgery which can lead to about 30 per cent weight loss but is very invasive, has associated risks, and is hard to scale to a larger number of patients,” Le Floch says.

“What’s really game changing right now is the rise of drugs that can address obesity,” he says. “One example is Wegovy from Novo Nordisk which has been an incredible success with limited side effects.

“The average weight loss is 15%, with one-third of people losing more than 20 per cent of their weight and prescription trends are skyrocketing. There are already 40 million people in the US with access to Wegovy,” Le Floch says.

“This is a market that has doubled from 2022 and we expect it to grow in double digits in coming years.”

Long-term investment

Regnan has been a long-term investor in Novo Nordisk, impressed with not only the current crop of drugs but also research into new treatments.

“You continue to see a pipeline of impressive innovations in clinical trials showing promising data, including even more effective weekly injectable treatments such as CagriSema, and oral treatments.

“The main issue Novo Nordisk has had recently is keeping up with demand,” Le Floch says. “This year, there were some supply disruptions which have been resolved as the company adds capacity.”

Novo Nordisk is not the only pharmaceutical company in the obesity treatment market. Eli Lilly also has a new treatment.  

“But outside Novo Nordisk and Eli Lilly, it is very hard for competitors to catch up. Pfizer discontinued one of their clinical trials. Smaller players so far have shown very mixed data,” he says.

“Also there is a lot of brand awareness by patients. Patients are coming to their physicians asking for the Novo Nordisk treatment.”

About Maxime Le Floch

Maxime is an analyst with Regnan’s impact investment team. He focuses on Regnan Global Equity Impact Solutions Fund. Maxime has more than 10 years of experience in sustainable investment. Before joining Regnan he was an investment analyst with Hermes where he helped launch and manage the Hermes Impact Opportunities Equity Fund.