Anti-obesity drugmakers Novo Nordisk and Eli Lilly have an enormous lead on their competition, but given the vast and precious market, rivals are still wanting to join the race. Bank of America analyst Geoff Meacham has been very bullish in regards to the opportunity, which he calls “unprecedented” given the prevalence of obesity and the massive interest investors have shown on this category to date. Meacham was among the many first to predict the category could hit $100 billion in peak sales, but now many analysts anticipate the market might be even larger . In keeping with the Centers for Disease Control and Prevention, about 42% of U.S. adults have obesity, a costly condition that is related to other big selection of other medical conditions, including heart disease, stroke and cancer. Novo Nordisk, the maker of Ozempic and Wegovy, estimates nearly 800 million people worldwide have obesity. Competition is coming This week, each Zealand Pharma and Viking Therapeutics showed the competition is coming as they reported encouraging progress from their experimental therapies on this broad category, which sent their stocks soaring on the news. Zealand shares popped 35% on Monday after upbeat results for its liver disease treatment survodutide. The treatment, which has a fast-track designation from the Food and Drug Administration, is also being studied for obesity. VKTX YTD mountain Viking shares yr thus far Then, Viking shares greater than doubled in trading on Tuesday, putting the stock on pace to report a greater than 300% year-to-date gain, after the corporate said its GLP-1/GIP receptor agonist VK2735 hit all its primary goals in a phase 2 clinical trial. Patients enrolled within the study lost about 13% of their weight after 13 weeks, which may be very competitive with other drugs on this class. Maybe even more encouraging, there weren’t any signs that weight reduction was plateauing, and the drug was well-tolerated with few patients discontinuing treatment. At the identical time, shares of each Novo and Lilly pulled back in trading on Tuesday. The competition is “not an issue for Eli Lilly or Novo Nordisk, but it surely actually raises the bar for them each,” Yuri Khodjamirian, chief investment officer at Tema ETFs, said in an interview. The Tema Cardiovascular and Metabolic ETF (HRTS) , which is up 12% yr thus far, owns Novo, Lilly and Viking. REGN YTD mountain Regeneron shares yr thus far Cardiovascular and metabolic disease is an area that was long neglected by the larger pharmaceutical corporations, but they’re taking note of the brand new developments, that are “very exciting,” Khodjamirian said. What’s more, he doesn’t think that this can be a winner-take-all situation, so Tema has investments in other early-stage corporations working to develop weight reduction drugs or taking other approaches to treating obesity. These include Biohaven , an organization working on drugs to stop the muscle loss that may accompany use of GLP-1 drugs, or Regeneron , which is looking right into a genetic approach to treating obesity. Mixed success But developing drugs on this space is not easy. “[T]hose recent entrants have had mixed results as Pfizer’s two assets and a few smaller players (e.g., Structure Therapeutics and Altimmune ) that underscore the clinical challenges of the space,” Meacham wrote in a recent research note. “Regardless, we expect the variety of entrants to proceed to swell, especially [as] we see progress on access + reimbursement.” But each Structure and Altimmune were trading higher Tuesday on Viking’s news. Other corporations working within the category and adjoining treatments include Terns Pharmaceuticals and Scholar Rock . AstraZeneca and Roche have jumped into the space by making acquisitions . ALT 6M mountain Altimmune shares over the past six months Jeff Jonas, portfolio manager at Gabelli Funds, sees other ways investors may benefit from increasing interest in anti-obesity medications. That features drug distributors like McKesson , who will profit from the growing volume of sales, and players who take part in the provision chain like Becton Dickinson . He was an investor in contract drug manufacturer Catalent , which can be bought out by Novo Nordisk’s parent in a deal that’s geared toward boosting Novo’s manufacturing capability. The portfolio manager expects Lilly and Novo have about two more years to enjoy their duopoly within the category before competition intensifies and the present $1,000-plus a month list prices for the GLP-1 drugs “collapse.” Still early days Some analysts and investors admit it continues to be very early days for obesity treatment and plenty of questions remain to be answered. For instance, patients who take these drugs can see the load creep back on once they stop taking the drugs. But will these people need to stay on these drugs for all times? That is not clear. Especially when one considers that the unwanted effects — which may include nausea, constipation and diarrhea — can force some patients to discontinue use. Next-generation drugs within the pipeline could seek to alleviate a few of these symptoms — and can likely be rewarded by patients in the event that they can. In the mean time, nevertheless, it hasn’t mattered much when patients halt treatment since the drugs are in such demand that the businesses are selling all they’ll manufacture. BofA’s Meacham recently shared IQVIA script data for the week ended Feb. 16 with clients that showed robust growth in GLP-1 prescriptions, up 22% from a yr ago. Meacham said he expects GLP-1 drugs accounted for a 31% share of the diabetes market in the primary quarter, up from 25% in the primary quarter of 2023. He estimated that 14% of the prescriptions for GLP-1 medication are being written for obesity, while 86% are for diabetes. “We proceed to expect above consensus growth within the space, as we’re bullish on adoption from payers and broader obesity uptake,” Meacham wrote. Zepbound, which was approved by the FDA to treat obesity in late 2023, is gaining share quickly, giving Lilly a 46% share of the general GLP-1 market, in line with Meacham. For obesity only, Lilly has already gained a 38% share, despite only being available in the market for 13 weeks, he said. And Lilly has the possibility to achieve much more ground with it grabbing about 47% of all the brand new prescriptions being written. What’s next for Viking As for Viking, a few of Tuesday’s enormous stock gains are being fueled by speculation that one other larger pharmaceutical company, like a Merck or a Pfizer will look to purchase it, in line with Tema’s Khodjamirian. That may often be the playbook within the sector. Khodjamirian noted that manufacturing these drugs is a difficult process, and Viking might want to construct a sales force as well to compete against the already established Novo and Lilly. But with the run-up within the stock, it’s turn out to be a more costly proposition. Gabelli’s Jonas said he’s skeptical of Pfizer’s interest provided that they’re already busy integrating previous acquisitions and have amassed a very good amount of debt. But, he said, the run-up in Viking’s stock value could allow it to fund its own growth. Commenting on Viking’s stock run-up, William Blair analyst Andy Hsieh said, “… we’re admittedly in uncharted territory regarding the industrial potential of the GLP-1 class, and the general public’s robust awareness could drive access expansion (specifically, initiation of Medicare reimbursement or growth in company-sponsored healthcare plans).” Hsieh said a competitor could challenge Lilly and Novo by competing on price. “We also emphasize that one in all the idiosyncrasies of the U.S. healthcare system, which grants pharmacy profit managers significant power to shape prescription patterns through the creation of formularies, could present a chance for non-first-in-class competitors.”