The irony is striking. A therapeutic drug that reduces weight by curbing hunger and influencing satiety has triggered a craving for profits across Pharma Inc. They call it the Ozempic effect.
The rise of semaglutide—the foundational base for the drug’s success—can be traced to trials by scientists in 2008 for a therapy for tackling diabetes. In 2012, a team of researchers at Novo Nordisk developed a once-a-week therapy for type 2 diabetics. In October 2017, the drug received approval from the US Food and Drug Administration (FDA). Along the way, random trials revealed that the drug also triggered weight loss and addressed obesity. In June 2021, the FDA approved Wegovy injections for weight management in adults with chronic obesity.
The rise in Novo Nordisk's fortunes merits detailing. In 2012, the shares of Novo Nordisk were priced at around $14 and its market cap was $90 billion. In January 2018, after the FDA approved Ozempic, its market cap touched $130 billion. In July 2021, following the approval for the weight loss drug, its market cap hovered at $190 billion. In September 2023, Novo Nordisk, a Danish firm, overtook LVMH as Europe’s most valued company. In November 2023, the market value of the listed shares of Novo Nordisk, at over $450 billion, is more than the $ 420-billion GDP of Denmark.
The scale of the success has catalysed competition. This week AstraZeneca, known as developers of the Covishield vaccine in India, announced and placed a bet of $2 billion on the booming craze for weight loss with an anti-obesity pill. AstraZeneca is the eighth company to enter the race. The race includes deep-pocket players such as Eli Lilly with a market cap of $567 billion, Pfizer with a market cap of $166 billion, Amgen with a market cap of $143 billion, and others such as Structure Therapeutics, Viking Therapeutics and Herbalife. The success of the drugs in the US has triggered demand in India. Indeed, Indian pharmaceutical outfit Dr Reddy’s Labs is embarking on a bioequivalence study on the efficacy of semaglutide on the Indian population.
The surge in prescriptions—a Morgan Stanley report forecasts sales of weight loss drugs could touch $77 billion in a decade—is driven by the aspiration to shrink the arc of misery. The discourse on the trade-off between risks and rewards is yet unravelling. The makers of Ozempic, for instance, list a number of common side effects such as nausea, vomiting, diarrhoea, stomach pain and constipation. The more serious risks include inflammation of the pancreas, changes in vision, kidney failures, gallbladder problems and possible thyroid tumours, including cancer. The FDA has updated the label to include a warning about intestinal blockage.
The race for market share is catalysed by the scale of illness. Diabetes and obesity are among the major causatives of morbidity and fatalities. In June 2023, the Institute for Health Metrics and Evaluation revealed that over half a billion people across the world are living with diabetes and this number is expected to touch 1.3 billion by 2050. The World Health Organization points out that “the majority live in low-and middle-income countries, and 1.5 million deaths are directly attributed to diabetes each year”.
Obesity is a silent accomplice of fatal ailments. Studies published by Lancet showed that “obesity was associated with 21 cardio-metabolic, digestive, respiratory, neurological, musculoskeletal, and infectious diseases”. The 2023 World Obesity Atlas shows that the number of people defined as obese could “rise from 2.6 billion 2020 to over 4 billion” and that “overweight and obesity will cost the global economy over $4 trillion of potential income by 2035”.
Indeed, India is among countries where both diabetes and obesity are on the rise. In June 2023, a study conducted by the Madras Diabetes Research Foundation in collaboration with the Indian Council of Medical Research and the Union health ministry revealed that there were 101 million people with diabetes, 136 million lived with pre-diabetes, 315 million had high blood pressure, 254 million had generalised obesity, and 351 million had abdominal obesity.
The rise in diabetes and obesity is aggravated by the industrialisation of food produce and the rise in consumption of processed foods. It is instructive that there is frantic speculation in the stock markets about fall in the sales of food products at Walmart, a slide in the sales of beer and snacks.
Already a crisis in OECD countries, the pitfalls of processed food consumption is now visible in developing economies. The Food and Agriculture Organization’s report on food security and nutrition observes, “The prevalence of child overweight is at risk of increasing with the emerging problem of high consumption of highly processed foods and food away from home in urban centres.”
The craze for prescriptions is driven by the context of compulsions—the physical pain and the cost of managing ailments. The tragedy is that there is scarce attention on addressing the cause, but systemic incentives are in place to enable profitable innovation to address the consequence. It is manifest that poor public policy design and callous corporate conduct have enabled the expansion of a landscape of opportunity.
Shankkar Aiyar
Author of The Gated Republic, Aadhaar: A Biometric History of India’s 12 Digit Revolution, and Accidental India
(shankkar.aiyar@gmail.com)
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