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The multi-billion dollar weight-loss drug market has ballooned in the past few years. And the two pharmaceutical companies currently duking it out for market dominance, Novo Nordisk and Eli Lilly, have a century-long rivalry. In today’s episode, Bloomberg News health reporter Madison Muller breaks down how Eli Lilly developed Zepbound, a new drug that can help patients cut more than 20% of their body weight — and why some investors and analysts say it could turn Eli Lilly into the first ever trillion-dollar drug company.

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Here is a lightly edited transcript of the conversation:

Sarah Holder: For the last few years, there's been this drug that everyone seems to be talking about.

Ozempic Commercial: Oh! Oh! Oh – zempic! People with type two diabetes are excited about the potential of once-weekly ozempic.

Sarah Holder: Ozempic was approved to treat diabetes in the US in 2017. But the effect it can have on weight-loss has become what it's most known for.

Ozempic Commercial: And you may lose weight. In the same one year study, adults lost on average up to 12 pounds. Oh, up to 12 pounds.

Sarah Holder: While it may seem like we've been talking about Ozempic forever… My colleague Madison Muller, who writes for Bloomberg’s health team, says it's only really been recently that a lot of people have been talking about this drug. 

Madison Muller: It's only been within the last five years that we've really started hearing about Ozempic, and especially within the last year or two years that, like, this has really taken off in the public consciousness.

Sarah Holder: And for the last six months Madison’s been writing a lot about Ozempic and other drugs like it, like Mounjaro and Wegovy. 

Madison Muller: When I first started covering this beat, the only drug that I was really hearing about or that people were talking about was Ozempic and then a little bit of Wegovy conversations too, but Ozempic is really the drug that started it all. I say that it's kind of like Kleenex, like it's just become the catch-all for all of these weight-loss drugs and sort of like the whole industry.

Sarah Holder: But now, years after Ozempic was approved for use in the US, there’s a new drug that could threaten its Kleenex like-status. A drug that looks poised to steal its market share and become the go-to drug in the space. It's called Zepbound.And it's picked up steam on TikTok, where people are sharing their experiences taking it.  

TikTok Video 1: Hey, it's Karen. Here's an update on my first week on Zep Bound after being on Wegovy for over eight months.TikTok Video 2:  Okay, you guys know that I picked up my first prescription of Zepbound, um, you guys know that I've been on Mounjaro  for 14 months.

TikTok Video 3: It is going to be called Zepbound, and I do not care. You could call it Dookie on a stick, and I would still inject this.

Sarah Holder: Today on the show: how a century-long pharmaceutical rivalry gave rise to the weight-loss drug craze, and why investors and analysts think this latest drug, Zepbound, could lead its manufacturer to become the first ever trillion-dollar drug company. I’m Sarah Holder, and this is the Big Take from Bloomberg News.

Sarah Holder: In a lot of ways, this story is a tale of two pharmaceutical companies: Eli Lilly and Novo Nordisk. Both companies have been major innovators in the treatment of diabetes and have been competitors for the past hundred years. But today we are going to start with Eli Lilly, not only because it’s the manufacturer of Zepbound, but also because it's where one of the key breakthroughs behind these types of drugs was discovered. Madison told us she learned about it from a man named Richard DiMarchi.

Madison Muller: Richard DiMarchi was a scientist at Lilly for like 22 years.

Sarah Holder: His research looked at the body’s endocrine system, which creates and releases hormones, like insulin. And he and a collaborator filed a patent for something called: 

Madison Muller: a GLP-1 receptor agonist drug. And what GLP-1 is, it's a gut hormone that helps control blood sugar, helps control insulin in the body. And what it also does is it mimics the effect of eating food. So after you eat, your body releases this GLP-1 hormone, and it signals to the brain that you can stop eating. And so that's what Wegovy and Ozempic are.

Sarah Holder: But DiMarchi says when he shared this finding with his employer Eli Lilly back in the nineties, they were not interested.

Richard DiMarchi: Lilly did nothing with this patent.

Madison Muller: Wow. Wow.

Richard DiMarchi: It just, just expired, which was a sign of the fact that they didn't believe that obesity was a disease, right? It was still a syndrome. They honestly did not believe that people would take an injection to treat a disease that was this benign. And of course I disagreed.

Sarah Holder: DiMarchi ended up leaving the company to continue research into diabetes and obesity. And the patent he filed expired in 2017.

Madison Muller: DiMarchi says that after he left Lilly, the interest in obesity just sort of ceased at the company.

Sarah Holder: Jeffrey Emmick, a senior vice president for product development who’d worked at Eli Lilly since the nineties told Madison, quote, “we just didn’t think they were going to be that efficacious.” But over in Denmark, a different approach was unfolding at Novo Nordisk.

Madison Muller: And at Novo, he had this counterpart, Lotte Knudsen, and she is still at the company, she's still at Novo, she has a leadership role now, and back then she was a young scientist, this was in the ‘90s, and she was also interested in GLP-1 drugs for obesity, and she encountered similar sort of disbelief, at Novo, and they questioned her work. But, she had support from leadership, and that was what mattered. She got the resources that she needed to keep going with this research.

Sarah Holder: Madison says Novo Nordisk's research paid off more than a decade later with a drug called Saxenda.

Madison Muller: That was the first GLP-1 drug ever to be approved by the FDA for weight-loss, and that happened in 2014. And so, Novo kept going, they wanted — this drug was injected daily, they wanted a drug that could be injected weekly. And so they were trying to change the molecule so that it could be a weekly injection instead of a daily injection. They changed it slightly, like added a fatty acid chain or something to it. And the way that they changed the molecule actually, led to a lot more weight-loss. So they weren't trying, still, to develop a more effective weight-loss drug. They were trying to make a once-weekly version. And they came up with Ozempic. Ozempic was the result of that. And the weight-loss from Ozempic was just substantial.

Like, it was way more than Saxenda. It was super effective. And that sort of started this whole interest in obesity again. So Novo Nordisk was out as the frontrunner in this space — but remember Eli Lilly is going to become a big player here too — they just weren't there yet. While Novo Nordisk was working on Ozempic — Eli Lilly was actually focused on treating a very different disease.

Madison Muller: They were, at the time like 2014 to 2017, really focused on Alzheimer's. They had for decades, poured billions of dollars into Alzheimer's research, so they were really hopeful about this, and all of those trials ended up being failures. Like really expensive, disappointing failures.

Sarah Holder: So right around 2017, Novo Nordisk is out ahead with Ozempic. And Eli Lilly is on its back foot, licking its wounds from its Alzheimer's flops, when Eli Lilly brings in a new CEO, Dave Ricks. And right away, he made weight-loss drugs a priority.

Madison Muller: He sent his top scientist to go basically do a short stint in diabetes research to see what he could find, see if he could find promising research. And he did. I mean, pretty much right away he found this small study of tirzepatide, which is a GLP-1 drug combined with another gut hormone called GIP, and there was this small study done in healthy people in Singapore just to see if the drug was safe or not. And what they saw was that people in the study lost so much weight that they had to drop out of the study.

Sarah Holder: That study was a good start, but Eli Lilly still had to make up for lost time.

Madison Muller: They knew that they needed to do this as fast as they possibly could to get a drug on the market as fast as they could. Because drug development can take a really long time, like it can take six to eight years, even a decade, and they didn't really have that time. Ozempic was already out there. They needed to do this quickly.

And so what Dan Skovronsky, who is now the chief scientific and chief medical officer at Lilly, told me was that he basically told the scientists to go forth with the innovation, do things quickly, and he kind of, like, freed them from the bureaucratic processes that can bog down drug development at a big company like Lilly. And yeah, I mean these scientists just went really fast, they got a drug on the market quickly. They did these trials quickly. They also went straight from a diabetes trial into a late-stage obesity trial.

They worked with the FDA to sort of speed up the process a little bit, too. And, yeah, and then Mounjaro was approved for diabetes in 2022, and Zepbound was approved for weight-loss last year.

Sarah Holder: After the break, what sets Zepbound apart, and why it could make Eli Lilly the first ever trillion-dollar drug company.

Sarah Holder: We're back. When we left off, Eli Lilly had just brought its new drug Zepbound to market. But it was still years behind Novo Nordisk and Ozempic.

Sarah Holder: Is it a big advantage for a drug manufacturer to be first to market?

Madison Muller: So you would think so, and in some cases it is, but, you know, it's unlike other industries where innovating too late is, could be a death sentence, for some companies. In the drug industry, what we see is that being first to the market has an advantage, but ultimately just having the best drug is what can set a pharmaceutical company apart.

Sarah Holder: Madison told me one of the key things to know about Zepbound is that it works slightly differently than its main competitors.

Madison Muller: Ozempic and Wegovy are a GLP-1 receptor agonist drug. And so what scientists are starting to realize is that by, like, layering and combining other hormones or other sort of molecules with GLP-1, you can get even more weight-loss. And so that's what Zepbound is. 

It's a combination of GLP-1 and another gut hormone called GIP. And what we see with that is that the weight-loss can reach up to like 21%. And the weight-loss that you see from Wegovy tops out at around 15%. And Lilly has another drug in the works that combines three different gut hormones, and that one is up to a third of your body weight is what patients are losing.

So it's sort of like by layering or combining different hormones together, you can get even more weight-loss, which is sort of what we're seeing with Zepbound.

Sarah Holder: As for what this new drug means for Zepbound's parent company — Eli Lilly — Madison told us there is this new acronym that’s popping up among investors.

Madison Muller: One of the analysts told me that JBL, which stands for “Just Buy Lilly,” is this new acronym that some investors that he's spoken to are saying there's like no limit in how high its stock will go, that it's just going to continue growing. It has a price earnings ratio of around 50 right now, which is really unheard of, for a pharma company.

Sarah Holder: If Eli Lilly continues on the trajectory that Wall Street expects it to, how much could it be worth?

Madison Muller: If Eli Lilly continues on its current growth trajectory, there are expectations, I guess, that it could become the first ever trillion dollar drug company. And there are expectations that its current valuation implies that Zepbound could bring in $70 billion by 2030. Just one drug alone.

Sarah Holder: The growth of drugs like Zepbound and Wegovy has meant real money for pharmaceutical companies. But their long term success will depend on how many people take them. Some people are deterred by the unpleasant side effects of these drugs, and some are turned off by the price — which can run upwards of $1,000 a month in the US. And a lot of private insurers don’t cover them.

Sarah Holder: Well, after doing all this reporting, what are your takeaways from the story of Lilly and Novo, and what will you be watching for next?

Madison Muller: Yeah, I think the story between, the competition between Lilly and Novo is not over yet, and it's going to continue for the next decade or even longer and what I'm curious to see is sort of how other drug makers now enter this race, and who's going to be next, you know, which product ultimately will win, because it might not be one of Lilly or Novo's. I mean, Amgen is developing a shot that's taken once a month and experts are really excited about that because the prospect of a drug being taken less frequently is very enticing and would likely be also attractive to patients. And so there are these other drugs that are, and other companies that are sort of circling and you know on the cusp of — they're still a little bit further behind Lilly and Novo, but it will be interesting to see what's next and how this continues to play out.

Sarah Holder: Thank you so much Madison.

Madison Muller: Thank you. 

(Corrects characterization of the current size of the weight-loss drug market in the episode description)

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