00:00 Speaker A
President Trump announcing deals with Eli Lilly and Novo Nordisk to slash the prices of some of their obesity drugs, pushing to expand access to the costly weight loss treatments.
00:13 Donald Trump
Eli Lilly and Novo Nordisk are committing to offer Zepbound and Wegovy at most-favored nations rates for American patients. This will slash the cost of Wegovy from $1,350 a month to ultimately $250 a month and reduce the monthly cost of Zepbound from $1,080 to $346.
00:52 Speaker A
We’re navigating how to play the pharmaceutical sector with the Yahoo Finance playbook. And joining me now, I got Courtney Breen, Senior analyst of US biopharmaceuticals at Bernstein. Courtney, it is great to see you. You’re in fact the perfect person to have here Courtney, because we got this news, Trump announcing deals with Lily and Novo, they’re going to cut prices for popular weight loss drugs, Courtney. How as investors, Courtney, should we think about this news? You know, what does it mean for for growth and margins and adoption? What are you telling clients?
01:29 Courtney Breen
It’s it’s great to be with you today and yes, today has been particularly busy and and noisy when it comes to this market. Uh a couple things that I think are really important. Today when we look at Medicare, which is your your older patient population. We have very, very limited access to these obesity products. And so as we look at this opportunity to open up that entire patient population through the demonstration project or pilot project that’s being established, um with the 245 price as well as offering that price into Medicaid, where we do only have a few states that are offering this product, these products broadly. This looks like a real volume opportunity for both companies. Notably, Lilly tends to get a greater market share with their Zepbound product relative to Wegovy. and so we would point to the fact that they’re more likely to gain more share and more volume relative to Noven Odisque.
02:46 Speaker A
How big, Courtney, is the GLP-1 market? What what are you tell clients?
02:52 Courtney Breen
This is the debate that that continues. Uh, in the US today, as we think about the number of patients that are currently taking these medicines, branded, uh it’s somewhere in the range of 8 to 10 million patients. Um this is a number that could really expand as we look forward to these new markets coming on board. So this could be expanding by five or so million patients in a pretty reasonable scenario as we get Medicare unlocked. You could see meaningful expansions over time as well as we get the oral products launching, which is another important part of this deal, where both companies have got commissioner’s review vouchers to ensure that their oral products get to market at as early as possible, which will be early next year. Um, in terms of the TAM and the size, this is the greatest debate, how much is this price coming down relative to the volume going up? There’s lots of moving pieces out there, but certainly we’ve always been talking about this market being well over 100 billion dollars trending towards that 125 billion dollar mark. And as we look at expansion and volume, uh opening up further, there’s lots to to believe that this could be a very buoyant and stable market for a long time.
04:36 Speaker A
And I know, I know Courtney, you don’t cover Novo, but Lilly you say is a buy here. Walk me through the catalyst you see ahead.
04:47 Courtney Breen
Yeah, it’s a it’s a great question. There are a lot of catalysts on the horizon for Lily. Um today was a really important piece of the puzzle. Not only was it getting this deal done and that policy pressure off, but it was also this commissioner’s review voucher for O for Glipperon. O for Glipperon is incredibly exciting. This is a small molecule. Um small molecules are particularly interesting in this space because they’re ultra scalable. That means that they can manufacture this product and distribute it at a much, much higher rate than we get with the injectables. A real opportunity to scale this TAM as we head into next year. So pulling that launch earlier into the year, base case for most analyst expectations with the was the middle of next year. and so pulling that kind of three to six months earlier is going to be a really meaningful catalyst. That launch is also likely to surprise to the upside. Um the volume that Lily has prepared here is material. On the other side of the equation, uh we do have scientific catalysts that are really critical for Lily. We had a Laura Lintide, one of their new products also read out today. Um and we’re looking forward to the beginning of next year into the first half of next year where red a tru tide will read out. This is their very high efficacy agent, which combines three different mechanisms to target obesity compared to the two that we have in today.
07:11 Speaker A
Switching gears, Courtney, another name you cover Pfizer, which is now locked in this uh litigation over the the Med Cebid. Um, I’m curious Courtney, how how you see this playing out and what potentially the ramifications are for Pfizer financially and strategically?
07:31 Courtney Breen
Yes. Uh, this is a this is a very unique situation. It is very rare that we see after a deal is announced, another company swooping in to try and take that deal. Um so this is particularly unique in the large cap space. Um and we’re now in this very public uh bidding war between the two companies and if anyone else was watching the uh the White House announcement today, you would have seen the Novadisque CEO say, well, if Pfizer does want this deal, they’re going to have to reach into their pocket and and offer more. Um, so this is a a kind of race to the top in many respects. I think what’s really important to know is that it is important that Pfizer doesn’t pay too much here. Um Pfizer has in the past been criticized for potentially spending too much on M& in kind of large sizable transactions. While this one at this point isn’t necessarily of the scale of some of those past deals. Um this kind of notion of a bidding war going up isn’t necessarily kind of going to bring many investors confidence in the fact that they haven’t haven’t overpaid for this particular asset. Um so we will see how this plays out. There’s obviously court cases going on in parallel. Um and the the current position is that Novo appears to have the highest bid in place at the moment and we are waiting to see if Pfizer is going to return or going to walk away.