Who will be the next "Medicine King"?

3-year 5-fold market value growth, why can weight loss drugs be so popular in the market?

In the past 3 years, what comes to your mind when you think of the most impressive pharmaceutical stocks?

That's right, it's the two giants in the field of weight loss drugs - Eli Lilly and Novo Nordisk, which have risen more than 5 times in the past 3 years.

With the expectation of weight loss drugs, Eli Lilly's market value has exceeded $500 billion, becoming the first pharmaceutical company in history to break through the $500 billion market value. Novo Nordisk has become the second largest market value company in Europe, about to surpass LVHM.

Weight loss drugs have become the fastest-growing product in history, destined to become the "King of Medicine"

The well-known semaglutide is a representative drug of the GLP-1 (glucagon-like peptide-1) class. From the mechanism of action, GLP-1 is a substance secreted after eating, which lowers blood glucose concentration by increasing insulin secretion and inhibiting glucagon release.

It can not only slow down gastric emptying and suppress appetite, but also convert white fat into brown fat to increase energy expenditure. (Brown fat and white fat store energy differently. Brown fat converts energy from food into heat through a large number of mitochondria in its cells.)

After semaglutide, which only needs to be injected once a week, disclosed clinical data showing an average weight loss of 16% over 68 weeks, its sales exploded and became the focus of attention for beauty lovers all over the world.

Based on its outstanding performance in the hypoglycemic market and weight loss field, semaglutide's sales in 2022 have exceeded $10 billion.

So far, there are 3 versions of semaglutide on the market, namely the injectable hypoglycemic version Ozempic, the oral hypoglycemic version Rybelsus, and the injectable weight loss version Wegovy.

In the first half of this year, Ozempic's sales were 41.7 billion Danish kroner, Rybelsus' sales were 8.344 billion Danish kroner, and Wegovy's sales were 12.081 billion Danish kroner.

The total sales of the three products amount to approximately $9.1 billion, close to the total revenue scale of last year. According to Novo Nordisk's guidance on second-half revenue, semaglutide's annual revenue this year is expected to be approximately $20 billion.

On the other hand, Merck's famous PD-1 drug, Keytruda, sold $12 billion in the first half of the year. It seems that Keytruda has a greater chance of winning the title of "King of Medicine" this year.

But one thing the market needs to know is that semaglutide is now a completely seller's market, in short supply worldwide, and the revenue depends entirely on Novo Nordisk's production capacity.

Due to Novo Nordisk's underestimation of the market in the past few years, the expansion of production capacity has been slow, directly restricting the speed of semaglutide's release. However, Novo Nordisk has already recognized this issue this year and has put accelerated production expansion on the agenda.

This means that starting next year, the potential for Semaglutide may shift from the field of cancer to the field of diabetes/weight loss.

The potential of Semaglutide goes far beyond this

If the expected market for Semaglutide is only in the field of weight loss, then this expectation is too narrow.

On August 9th this year, the results of the third phase 3 clinical trial of Semaglutide were announced: a 20% reduction in cardiovascular disease risk.

This once again drove the market crazy, further expanding the imagination of the future market space for GLP-1 drugs. Novo Nordisk's stock price soared by 17% that day, with a market value exceeding 400 billion US dollars.

Before this, although numerous studies have shown the correlation between obesity and various cardiovascular diseases, Semaglutide is the first drug clinically proven to reduce the risk of cardiovascular disease with a weight loss drug.

Weight loss can prevent the occurrence of more diseases, opening up the imagination of Semaglutide once again. It turns out that there are still a bunch of diseases that can be treated with this drug.

In addition to diabetes, weight loss, and cardiovascular diseases, Semaglutide is also being clinically tested in the fields of NASH, chronic kidney disease, and Alzheimer's disease. Each of these diseases represents a market worth hundreds of billions.

Once it is proven that weight loss can reduce the risk of so many diseases, the willingness of insurance companies to pay for weight loss will increase significantly.

According to a new survey by KFF, about 45% of surveyed American adults expressed interest in taking "safe and effective weight loss drugs". However, without insurance coverage, only 16% of adults are still interested in taking weight loss drugs.

The willingness of insurance companies to pay means a significant increase in potential patients.

Semaglutide has evolved from a simple drug to a consumer product with health attributes and even medical aesthetics attributes. It is difficult to find a second product with such perfection in the pharmaceutical industry.

From the perspective of a 5-fold increase in market value in 3 years, weight loss drugs are undoubtedly the biggest investment opportunity in the current pharmaceutical industry.

From the perspective of domestic investment, what insights does it provide to Chinese investors?

On Saturday, September 2nd, Wall Street Master Class will invite Sun Yuanyuan, General Manager of the Health Research Center of CICC Economic and Financial Research Institute, and Chief Analyst of the Healthcare Industry, together with Dong Nan, Head of the Healthcare and Medical Devices Group, and Yang Xicheng, Head of the Innovative Drugs Group, to deeply analyze the industrial opportunities of domestic weight loss drugs and share the latest research results and views of the CICC Healthcare team on current market concerns such as anti-corruption in the pharmaceutical industry and the next opportunity for innovative drugs.

• Why invite the Industrial Pharmaceutical team to give lectures on the pharmaceutical industry?

Teacher Sun Yuanyuan graduated from the School of Medicine, Fudan University, and is the successor of Xu Jiaxi, former Deputy Dean of the Industrial Securities Research Institute and Chief Pharmaceutical Analyst. She has more than 10 years of experience in pharmaceutical research. The Industrial Pharmaceutical team has been listed in authoritative selections from 2014 to 2022, winning first place six times and first place in other authoritative selections such as IAMAC. Teacher Sun Yuanyuan has also been awarded the Best Analyst for Profit Forecast by Tianyan, and she excels in in-depth research on the pharmaceutical industry and the exploration of high-quality companies.

Teacher Dong Nan, the leader of the medical device group, and Teacher Yang Xicheng, the leader of the innovative drug group, have both been deeply involved in the pharmaceutical industry for many years. They have their own unique research methods and insights in the fields of innovative drugs and medical devices, and they are believed to bring you inspiration in the course.

• Why is this pharmaceutical industry course worth attending?

In this master class, the Industrial Pharmaceutical Research team will help investors analyze the current development of the pharmaceutical industry, establish research frameworks and methods in the fields of innovative drugs and innovative medical devices, explore investment opportunities in the industry under the new policy cycle, and look ahead to the future development trends of the pharmaceutical industry.

Looking at the pharmaceutical industry as a whole, how have the supply side, demand side, and policy side changed during the long cycle of the pharmaceutical sector from 2006 to 2022? How should the research framework of the Chinese pharmaceutical industry be reconstructed?

Focusing on the innovative drug track, where is the next opportunity for innovative drugs in China? Is the weight loss track promising? What innovative technologies are worth looking forward to?

The time is right for domestic substitution, what new potential does the field of innovative medical devices have? Under the promotion of policies, what new opportunities will emerge in high-end medical equipment?

The new policy cycle for the pharmaceutical industry, will the anti-corruption efforts in the pharmaceutical industry promote the purification of the industry ecosystem and accelerate industrial innovation and upgrading? How will pharmaceutical policies affect the future development of the industry?

If you are an investor in the pharmaceutical industry, this course will help you understand the development trends of the pharmaceutical industry and seize investment opportunities under the high pressure of pharmaceutical policies. If you are an ordinary person, this course will also help you understand the changes in industry policies, learn about the most advanced medical technologies, and keep up with the development of the biopharmaceutical industry.

This Saturday in Shanghai, the Industrial Pharmaceutical team's master class, we welcome your participation!