Has 20% Weight Loss Become the New Normal?

In a surprising turn of events on December 20, Novo Nordisk, a heavyweight in the pharmaceutical industry, saw its stock plunge by nearly 30% in pre-market trading, marking the largest single-day decline in its historyThe turmoil was largely attributed to the company’s unveiling of phase three clinical data for its weight-loss medication, CagriSema, which failed to demonstrate a statistically superior weight-loss effect compared to Eli Lilly's established GLP-1 drug, tirzepatide (marketed as Mounjaro). This disappointment sent shockwaves through the market and drew focus to the escalating competition in the obesity treatment space.

The clinical findings revealed that patients using CagriSema via continuous injection for 68 weeks achieved an average weight reduction of 22.7%. This figure edged out Eli Lilly's tirzepatide, which reports an average weight loss of 22.5%. Despite initial projections from Novo Nordisk suggesting that CagriSema could potentially help patients lose up to 25% of their body weight, the actual performance fell short, igniting skepticism among investors.

On the same day, Eli Lilly experienced a surge in its stock price, skyrocketing by nearly 10% in pre-market trading

The sharp contrast in market reactions illustrated the heightened expectations investors have regarding weight-loss efficacy in medicationsOne biomedical investor remarked, “It’s evident that the market's appetite for weight-loss results has grown exponentially; a weight-loss rate in the low 20% range isn’t meeting expectations anymore.”

This scenario bears resemblance to a previous announcement made by Amgen last month, which reported promising mid-stage clinical trial results for its monthly injectable GLP-1 drug, MariTide, which also induced a weight loss of about 20%. Despite these positive developments, Amgen's stock faced a significant dip, showcasing the fierce competition and the high standards set by investors eager for groundbreaking results.

As we look toward 2024, the real estate sector's ongoing downturn is exerting intense pressure on the steel industry, as a slowdown in real estate development and a reduction in new projects are contributing to a marked decline in steel demand

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However, the push for infrastructure development appears to serve as a critical lifeline, with numerous transportation and energy projects underway, consuming substantial quantities of steelThe automotive sector's steady growth, driven by technological advancements and increased consumer demand, further bolsters steel needs, given its reliance on high-quality steel in manufacturing processes.

Moreover, the shipbuilding industry continues to see consistent demand for steel as new orders for vessels rise, aided by global trade needsWhile China faces challenges in steel exports due to elevated international competition, this segment still plays a role in easing some domestic overcapacity issuesThis complex dynamic within the steel market, where supply and demand strive for balance, signals an industry grappling with both difficulties and potential avenues for growth.

Looking ahead to 2025, infrastructure investments are expected to maintain a certain scale, providing a steady safeguard for steel demand; the automotive industry's evolution will keep fueling consumption for automotive-grade steel; and the shipbuilding sector, spurred by expanding ocean economics, continues to reflect robust steel demand

However, the real estate industry is unlikely to see rapid recovery in the short term, which may limit its positive impact on steel consumptionAdditionally, rises in tariffs imposed by several countries introduce hurdles for Chinese steel exports, curtailing growth that would otherwise stimulate overall steel demand.

In the unfolding weight-loss treatment landscape, Eli Lilly’s tirzepatide has already outstripped Novo Nordisk’s semaglutide substantiallyEarlier this month, Eli Lilly released results from a head-to-head phase three clinical trial which showcased that after 72 weeks of tirzepatide administration, non-diabetic overweight or obese patients experienced an average weight loss of 20.2%, contrasting sharply with the 13.7% average weight loss for patients using semaglutide over the same durationThis underscores a nearly 50% superiority of tirzepatide's weight-loss capabilities over semaglutide, further intensifying the competitive landscape.

In response to the challenges posed by its competitors, Novo Nordisk is accelerating the development of its next-generation weight-loss medications

CagriSema is a critical compound in this pursuit, with expectations set for a 2026 market releaseUnlike Novo Nordisk's current semaglutide, which mimics the mechanism of the gut hormone GLP-1, CagriSema introduces a second mechanism of action via Cagrilintide, another compound that shares similar properties with the gut hormone, amylinThis compound too suppresses appetite but purportedly holds fewer side effects compared to GLP-1 medications and aids in sustaining a feeling of fullness for extended periods.

Over the past three months, Novo Nordisk's stock price has plummeted by nearly a quarter, leading to an evaporation of over $100 billion in market capitalizationAs it stands, Novo Nordisk is valued at approximately $350 billion while Eli Lilly has surpassed $710 billion in market value.

In the competitive Chinese market, both companies are gearing up for a legal and market "positional battle." In July, Eli Lilly’s tirzepatide received approval from China’s National Medical Products Administration (NMPA) for its weight-loss indication

Plans for the drug's commercialization in China are set for execution within the yearMeanwhile, Novo Nordisk recently secured commercial approval for its semaglutide weight-loss indication (branded as Nao Yang) in China just last month.

The launch of GLP-1 weight-loss medications has also raised concerns surrounding medication supply chainsAlthough the U.SFDA recently announced the resolution of Eli Lilly's shortage of its weight-loss drug, reports indicate tight supply for the product in the Chinese market.

In response, Eli Lilly has already initiated plans to expand its production capabilitiesIn October, Eli Lilly China revealed an investment of approximately 1.5 billion RMB to upgrade its Suzhou facility to accommodate increased manufacturing capacity for innovative diabetes and obesity medications to meet the demands of Chinese patients.

In August, Eli Lilly predicted that the total sales for its tirzepatide across both weight-loss and diabetes indications were expected to reach $15 billion for the year.