Eli Lilly and Co (NYSE:LLY) shares were trading 2.6% higher pre-market after a positive read-across from a key trial read-out from its main rival in the weight-loss market.
Denmark’s Novo Nordisk (NYSE:NVO) stopped a trial early after it emerged its Ozempic jab had been a resounding success in treating kidney failure in diabetes.
It is rare for this to happen but underlines the faith that Novo’s independent monitoring board had in the results.
Lilly has developed its own competitor to Ozempic, called Trulicity, which is prescribed to control blood sugar levels.
Whole new class
This whole class of drugs, called GLP-1 agonists, has blown up over the past 12 months.
Initially, prescribed to treat diabetes, Ozempic, Trulicity, Byetta and Victoza, are finding huge traction in the weight-loss market where they have been clinically proven to help users shed the pounds.
Their impact has been such that Wal-Mart, America’s largest retailer, last week reported a shift in food buying patterns among those using the most common GLP-1.
Some research by Citi on Novo Nordisk (NYSE:NVO), whose shares are also up 3%, underlines the huge potential of Ozempic – and, by extension, the other products in its class.
Its analysts predict its revenues from just this one source – currently an already very punchy $23 billion – will grow to $73 billion by 2035.
Growth market
“We continue to argue the GLP-1 story is one of market growth, rather than market share, that will be dominated by Novo and Eli Lilly through the next two decades,” said Citi in a note to clients.
“This reflects an entrenched commercial/rebate position, superior product profiles, compelling outcomes data, strongest pipelines…and volume requirements providing significant barriers to entry.”
The downside to this story, and there had to be one, is that stock in Fresenius Medical Care (NYSE:FMS) AG & Co KGaA, the maker of kidney dialysis machines, tanked 17% premarket on the Ozempic data release.
Ahead of the bell, Lilly shares put in a positive performance as they advanced $15.25 to $594.56. This may not seem a great deal until you realise it adds another $14 billion to the value of the business.