Morgan Stanley analysts said they’re seeing a profound shift in the way in which diabetes is being treated, with doctors intensifying the deal with weight management, which is accelerating the uptake of GLP-1 medications. What’s more, the analysts anticipate that over the subsequent 24 months, this weight-centric approach will begin to spread to other health complications — from heart failure to sleep apnea to kidney disease. “Over the past 12 months, we’ve increased our Novo/Lilly GLP-1 revenues in diabetes from $40bn to $56bn in 2030, outpacing revenue upgrades within the obesity setting,” the analysts wrote in a research note published last Friday, referring to their sales forecasts. Within the GLP-1 category, Novo Nordisk markets semaglutide under the brand name Ozempic for the treatment of Type 2 diabetes and under the name Wegovy to treat obesity. Meanwhile, Eli Lilly has been approved to sell Mounjaro, or tirzepatide, as a Type 2 diabetes treatment. The drug is predicted to be approved by the Food and Drug Administration for weight reduction by the top of this 12 months. Each GLP-1 medications have attracted quite a lot of attention for his or her ability to lower blood sugar, curb food cravings and help patients with weight reduction. Each corporations even have next-generation products within the pipeline that show early promise of being even more practical. While other biotech and pharmaceutical corporations are developing their very own products , Novo and Lilly are expected to dominate the category for years to return. Morgan Stanley said GLP-1 medicines now make up nearly 30% of all latest diabetes prescriptions within the U.S. About 22% of all diabetes prescriptions are for this class of drug. Outside the U.S., the uptake has been slower, which the analysts say is a possibility for future growth; they put global sales, excluding the U.S., at greater than $70 billion by 2030. Eyes on Novo’s Select study Morgan Stanley’s assessment comes ahead of highly anticipated results from Novo’s Select study, which is predicted to be released sometime in the approaching weeks. The five-year study looks on the long-term cardiovascular advantages that obese patients have realized while taking Wegovy. The 17,500 patients within the study took either Wegovy or a placebo. NVO YTD mountain Novo Nordisk shares have climbed about 20% 12 months thus far. Positive leads to the trial could help support the concept that treating obesity and fewer extreme weight gain with GLP-1 medications will make patients healthier and ultimately save the health-care system money. Heart disease and hypertension are two conditions commonly related to extra weight, but there are also connections to sleep apnea, chronic kidney disease and other conditions. Investors are hoping that strengthening the tie between weight reduction and higher health will help patients get insurance coverage for these pricey medications. That features Medicare, which just isn’t allowed to reimburse patients for weight reduction medications. Morgan Stanley said it has been surprised already by how quickly insurers are adding coverage of the drugs, which might cost greater than $1,000 monthly. “Reimbursement for obesity medicines has expanded much faster than we had anticipated, covering 40m lives within the U.S., which exceeds the entire number of individuals estimated to be affected by diabetes,” they said. The analysts now anticipate the marketplace for GLP-1 medications will reach $77 billion in 2030, up from a previous forecast of $54 billion. “We now have remodeled the obesity medicine opportunity based on the faster rate of uptake seen within the U.S., with our expectation that positive SELECT trial data will drive positive treatment guideline changes at the top of 2024. We consider the domino effect of this can be to unlock the patient-physician engagement bottleneck even further and broaden payer engagement,” Morgan Stanley said. The Wall Street investment bank also raised its price goal for Lilly shares to $560 from $551. The brand new goal implies 20% upside from Monday’s close. Morgan Stanley’s price goal is much higher than the $471 average. Lilly shares have climbed about 26% 12 months thus far, through Monday. LLY 6M mountain Eli Lilly shares are up greater than 26% 12 months thus far. Earnings upside for Lilly Meanwhile, Wells Fargo on Monday predicted Lilly’s second-quarter revenue would top expectations due to stronger-than-expected Mounjaro sales gains. “We see LLY edging revs by ~ 3% during 2Q earnings as Mounjaro revs are highly sensitive to improvements in reimbursement. EPS guide of $8.65-$8.85/sh may not change meaningfully as LLY could opt to re-invest in upcoming launches in [Alzheimer’s disease] and immunology,” analyst Mohit Bansal wrote in a research note explaining the forecast. Lilly is scheduled to report second-quarter results Aug. 8. Lilly has been offering co-pay assistance coupons to assist patients begin using Mounjaro even when their health insurers aren’t yet fully reimbursing for the drug. Nonetheless, as more insurance firms add the drug to their list of covered medications, the quantity of revenue Lilly recognizes per prescription can rise. “We expect price will proceed to enhance as lower payer mix patients from 2022 co-pay card roll off,” Bansal said. That is why he is not concerned that the entire variety of Mounjaro prescriptions has slowed for the reason that starting of June, as he expects it’s because of the churn of less profitable patients who had used the co-pay card program. This implies revenue growth can have continued in June as more patients, or their insurance providers, were paying a fuller price. — CNBC’s Michael Bloom contributed to this report.
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