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When the dust settles: The future shape of the obesity market
More segmented and reflective of diverse patient needs
Markus Gores, Vice President, EMEA Thought Leadership
May 13, 2024
  • Blogs
  • When the dust settles: The future shape of the obesity market

The arrival of highly effective weight loss pharmacotherapies marked an inflection point for the obesity market. For the first time pharmacological interventions delivered meaningful weight loss of 15% or more, triggering extraordinary consumer-led demand.

As product supply continues to trail surging demand, fundamental ‘rules of the road’ governing the way pharmaceutical prescription markets typically behave have been suspended. For example, we see an unprecedented willingness by patients to pay out of pocket, even outside the U.S., with Novo Nordisk estimating that at present 80% of ex-U.S. sales are self-funded by patients1; or leading players Novo Nordisk and Lilly curtailing their promotional activities to avoid stimulating even more demand, while traditional brand differentiation currently plays a secondary role vs. satisfying unmet patient demand as the dominating force.

At the same time, healthcare systems are tightly restricting reimbursement of anti-obesity therapies, as they struggle with how to reconcile the need to tackle obesity as a major, growing public health crisis, how to fund a new mass market, chronic disease area potentially valued at up to $131bn globally by 20282, while ensuring equity of access and that treatments reach those patients who need them most.

In the UK, for example, NICE guidance requires one weight-related co-morbidity and a BMI ≥35.0 kg/m2 to cover Wegovy, with the drug being prescribed within specialist weight management services and reimbursement limited to a maximum of 2 years. In several countries public payers are prohibited by statute from covering weight loss medications, for example in Germany, Italy and Medicare in the U.S. Meanwhile, private payers are also under pressure, e.g., Denmark's largest private health insurer, Sygeforsikring Danmark, stopped reimbursing weight loss medications in January 2024 due to overwhelming demand3; in the U.S., two large employers, Ascension, one of the country’s biggest hospital systems, and the University of Texas, announced in 2023 that their plans will no longer cover Wegovy and other weight loss drugs.4

Against this backdrop, the obesity market is currently viewed in very simplistic terms: A monolithic opportunity, clinically defined one-dimensionally by body mass index (BMI) cut-off thresholds and segmented into two, binary market archetypes – out-of-pocket vs. reimbursed – solely based on the underlying funding mechanism.

As we will discuss in this blog, the future opportunity in obesity will be defined by much more granular patient segmentation that is reflective of true, complex, multi-dimensional unmet needs.

Moving beyond the initial hype phase

Several trends are driving the emergence of a less monolithic, more mature obesity market where the opportunity manifests itself in distinct patient segments. Capturing that opportunity will require a more nuanced understanding of unmet needs to inform more tailored, patient-centric approaches.

  • A crowded pipeline: The stellar performance of Novo Nordisk’s and Lilly’s respective obesity franchises has prompted many companies to pursue their own development efforts to claim a share of this huge commercial opportunity. Consequently, the growing obesity pipeline today comprises over 120 weight loss agents which are being developed by 60 companies across multiple mechanisms of action (MoAs) and different formulations, including many orals (see Figure 1).

    • Such a crowded field inevitably raises questions about differentiation and how to carve out a viable proposition in the obesity market, especially for later entrants. While the first new competitors to challenge Novo Nordisk and Lilly are not expected to enter the market until 2027, today’s incumbents themselves face a near-term challenge of differentiation. As Novo Nordisk and Lilly keep expanding their obesity portfolios, their respective new assets with novel MoAs, some of which are expected to enter the market in the next 3 years, will need to be optimally (co-)positioned, in the context of both each player’s own portfolio and against the wider market.
Source: IQVIA Analytics Link; Clinicaltrials.gov; desk research; IQVIA EMEA Thought Leadership analysis

  • Label expansion into co-morbidities: On 20 March 2024, Wegovy became the first obesity therapy with an expanded label as the FDA approved inclusion of the reduction in the risk of cardiovascular death, heart attack and stroke, following the successful SELECT CV outcomes trial in 2023. Numerous clinical trials are underway investigating obesity assets in co-morbidities, e.g., MACE-3 components, heart failure, sleep apnea, chronic kidney disease (CKD), NASH/MASH, osteoarthritis of knee, with several recent positive, high-profile readouts, including semaglutide in CKD and HFpEF; semaglutide, tirzepatide, survodutide in NASH/MASH; and tirzepatide in sleep apnea.

  • Co-morbidities as route to reimbursement: In the UK, NICE guidance requires one weight-related comorbidity for obese patients to be eligible for reimbursed treatment with Wegovy, albeit time-limited. Despite health systems’ general reluctance to cover anti-obesity medicines, the SELECT trial results and Wegovy’s subsequent label expansion to include CV outcomes were broadly met with positive responses. Even the U.S. and Germany, where public payers are prohibited by law from covering obesity therapies, indicated a willingness to potentially reimburse Wegovy in obese patients with certain co-morbidities.

  • Recognising the heterogeneity of obesity: There is a growing understanding among healthcare stakeholders that a one-dimensional view of obesity solely defined by BMI is grossly inadequate to capture the complexity of its varied manifestations (see Figure 2). Furthermore, BMI fails to account for factors such as muscle mass, bone density, ethnic differences in body composition, genomic variations or the presence of co-morbidities, let alone a patient’s potential response to different therapy options. Consequently, the definition of treatment success is also expanding beyond headline weight loss achieved, to include the full spectrum of patients’ therapeutic needs, for example:

    • Effective and durable weight maintenance
    • Managing co-morbidities along the cardio-metabolic-renal spectrum
    • Preserving muscle mass
    • Tolerability, safety
    • Convenience, e.g., delivered via oral therapies and/or less-frequent dosing
    • * Including diabetes, ASCVD, Afib, HTN, PAH, dyslipidaemia, heart failure, PAD, MI, stroke, cardiovascular disease, CKD
    Source: IQVIA LAAD; desk research; NEJM publications of obesity trial results; IQVIA EMEA Thought Leadership analysis


    Once the existing supply-demand gap has been resolved, we expect the obesity market will begin to exhibit more orthodox dynamics, driven by choice and competitive strategies seeking differentiation that is anchored on addressing specific unmet needs in discrete patient sub-populations.

    Segmenting the obesity market

    In future, three macro-dimensions will define multiple, co-existing obesity market segments which each have specific characteristics, including opportunity size, critical success factors and competitive dynamics.

    1. Patient need: This dimension spans patients’ clinical and non-clinical needs related to obesity and co-morbidities. These are further stratified by specific patient profiles, such as age, gender, ethnicity, disease severity, morbidity overlap, risk factors, other phenotypes determining therapy response and tolerability. In turn these define optimal therapy choice, for example, a high BMI requires a more potent anti-obesity therapy, e.g., a triple hormone-receptor agonist targeting GLP-1, GIP and glucagon, to achieve initial weight loss; co-morbidities like NASH/MASH may demand treatment that delivers weight loss and acts on the liver, e.g., via a glucagon/GLP-1 receptor dual agonist or a combination therapy of GLP-1 and an antifibrotic agent such as an FGF21 analogue; the patient’s age may determine the need for prioritising muscle preservation, while other phenotypes may determine therapy choice based on expected tolerability and response.
    2. Therapy goal: This dimension captures the distinction between typically time-limited induction therapy which delivers the majority of weight reduction vs. long-term maintenance therapy to make that weight loss permanent, including associated benefits such as improvements in cardio-metabolic risk factors or co-morbidities. This distinction could assign different therapeutic roles for injectables vs. oral drugs, with the former used as induction agents followed by oral anti-obesity medicines in the maintenance phase. Long-term use would benefit from the greater convenience of oral therapies, to ensure high levels of patient adherence required, while their potentially lower COGS may enable sustainable pricing to help address affordability and budget impact challenges.
    3. Funding mechanism: This dimension captures the way treatment of obesity is funded, i.e., reimbursed vs. out-of-pocket, at the intersect of specific patient profiles and therapy goals. This will likely vary by product, as payers prioritise unmet needs vs. relative therapy benefits. In a budget constrained environment, we believe reimbursed and out-of-pocket market segments will continue to co-exist. However, their relative size will vary by country and depend on several factors, such as the disease burden of obesity and whether policy makers regard obesity as a public health priority; the state of healthcare finances; delays in securing reimbursement by public payers; the willingness of private insurers to fund obesity therapies; population wealth, ability and willingness to self-fund; and the maturity of a private market for prescription medicines.

    Source: IQVIA EMEA Thought Leadership


    Consequently, the shape of the future obesity market will be very different from today’s. The intersect of these three dimensions will create a more stratified market, reflecting nuanced patient needs, different therapy goals and who pays (see Figure 3).

    Implications

    The emergence of multiple, co-existing market segments defined along the above three dimensions will fragment the obesity opportunity, with profound implications for healthcare systems and innovators:

    • A personalised, patient-centric approach is needed for achieving optimal patient and health system outcomes. This requires more differentiated guidelines to inform and enable better tailoring in how obesity is treated.
    • Granular insight is critical to define relevant patient segments and identify them in routine practice, for example combining clinical trial data, real-word evidence, patient-generated data, e.g., utilising wearables, biomarkers, genomic profiles, or information on a patient’s microbiome.
    • The primary care setting will play a key role in a scalable approach to address the obesity public health challenge by serving a broad population spanning a diverse range of different patient segments.
    • Innovators, especially later entrants, will need to make strategic choices about in which opportunity segment(s) to play, potentially having to place big bets. This in turn will determine their competitive strategy, e.g., which specific unmet needs their asset(s) will address, who to differentiate against and how, including the type of evidence required to support a unique, differentiated value proposition.
    • A product portfolio will offer strategic advantages over a single asset approach. Firstly, it will allow innovators to play across several market segments, for example, seamlessly addressing evolving needs along the patient journey as patients transition from induction to maintenance phase, by owning a high potency injectable and an oral therapy; or using product combinations that can address more complex patient needs involving multiple co-morbidities. This can deepen HCP and patient loyalty for a company seen as covering all needs end-to-end. Secondly, given prescriber overlap across different patient segments, a portfolio approach enables synergies, e.g., in promotional investment. Finally, as we have seen in other therapy areas, a product portfolio can strengthen a company’s hand in payer negotiations by being able to offer a more compelling proposition.
    • Opportunities exist for a few, more broadly used ‘backbone agents’ to emerge which play across several market segments, as monotherapies and as part of combination approaches. First-generation incumbents, such as Wegovy or Zepbound, may benefit from a first-mover advantage building on a large body of evidence, HCPs’ extensive hands-on experience and possibly brand loyalty, especially from patients in out-of-pocket market segments.

    Once we move past the current hype phase and the dust settles, the ‘rules of the road’ governing typical competitive dynamics of pharmaceutical prescription markets will re-establish themselves in obesity.

    The future obesity market will look very different from today’s – more segmented, defined by nuanced patient needs and where competitors seek differentiation.

    This also raises important questions about how to successfully commercialise in such a market, e.g., what go-to-market capabilities and investment levels are needed. We will explore these issues in a future blog.


    Visit the IQVIA Knowledge Hub to get a deep overview about this global health challenge.


    References

    1 Novo Nordisk Capital Markets Day, obesity care presentation, 7 March 2024: https://www.novonordisk.com/content/dam/nncorp/global/en/investors/irmaterial/cmd/2024/P5-Obesity-Care.pdf
    2 IQVIA Institute report, 2024: The Global Use of Medicines 2024
    3 Reuters, 28 April 2023: Denmark's largest health insurer drops weight-loss drug coverage as demand soars
    4 Forbes, 3 August 2023: https://www.forbes.com/sites/joshuacohen/2023/08/03/new-classes-of-obesity-drugs-face-strong-headwinds-from-insurers

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