The Weight Loss Drug Boom Isn’t Over Yet — Here’s What To Expect In The Year Ahead

By Annika Kim Constantino

Weight loss drugs exploded into the public eye this year, and 2024 will bring more change to the evolving market.

The drugs skyrocketed in popularity in 2023 as they helped patients shed significant weight, despite hefty price tags, mixed insurance coverage and a handful of unpleasant side effects.

Demand for the drugs is unlikely to slow down in 2024, especially as treatments gradually become more accessible. Much of Wall Street believes the weight loss drug market will only expand, with some analysts projecting that it will be worth $100 billion by the end of the decade. Goldman Sachs analysts expect 15 million U.S. adults to be on obesity medications by 2030.

But next year, investors will be watching how the dominant players in the market, Novo Nordisk and Eli Lilly, navigate supply issues plaguing their treatments. Patients have been struggling to get their hands on Novo Nordisk’s weight loss injection Wegovy, its diabetes treatment Ozempic, and Eli Lilly’s diabetes injection Mounjaro.

Analysts expect supply constraints to improve but note that the broader issue will take years to resolve.

Outside of supply headwinds and the lack of broader insurance coverage for weight loss drugs, Novo Nordisk and Eli Lilly have a big year ahead of them.

Novo Nordisk could win approvals for expanded use of Wegovy in the U.S. and Europe. Eli Lilly’s newly approved weight loss drug, Zepbound, could garner more than a billion dollars in sales in its first year on the market.

Both companies are also expected to release new data that could show other potential health benefits of their drugs beyond weight loss and diabetes management, which may increase insurance coverage down the line.

Next year may mean even more to the other companies hoping to join what’s so far been a two-horse race to make weight loss treatments.

New drug data from Pfizer and Amgen, and the potential for more buyouts or collaborations between larger companies and smaller makers of obesity drugs, could alter the market’s competitive landscape in the coming months.

The supply problems plaguing Wegovy, Ozempic and Mounjaro are likely “the biggest thing” investors will watch next year, Guggenheim analyst Seamus Fernandez told CNBC.

Some analysts said supply constraints will likely persist for years, but expect them to ease in 2024 as Novo Nordisk and Eli Lilly work to expand manufacturing capacity for their drugs.

Novo Nordisk during its third-quarter earnings call in November said it is “looking at significantly scaling our supply” of Wegovy in the U.S. in 2024. TD Cowen analyst Michael Nedelcovych told CNBC that the company during the call appeared to suggest that such a change wouldn’t look like a big jump in supply but rather steady improvements over time.

Supply could increase more significantly years from now: Novo Nordisk in November said it would invest $6 billion to expand its manufacturing facilities in Denmark, noting it will finish construction from the end of 2025 through 2029. The company also said it would spend around $2.3 billion to expand another production site in France.

Meanwhile, Eli Lilly said during its third-quarter earnings call in November that the supply of Mounjaro has improved in the U.S. even as it remains constrained around the globe.

Executives also said that Eli Lilly is on track to achieve its goal of doubling production capacity for drugs such as Mounjaro, in part through investments in new manufacturing sites in North Carolina and Indiana.

But Eli Lilly CEO David Ricks said on the call that the company is “aggressively planning” further production buildup for Mounjaro and other drugs. He added that “it’s a problem we work on every day. So we’re not at all happy with the capacity.”

Wall Street has high hopes for Eli Lilly’s Zepbound, which is already available at U.S. pharmacies. Some analysts expect the medication to earn blockbuster status next year, which is when a treatment’s annual sales exceed $1 billion.

Morgan Stanley expects Zepbound to rake in $2.2 billion in sales in 2024, according to a note released after the drug’s approval in November. Meanwhile, Bank of America analysts in a November note projected $2.7 billion in Zepbound revenue in 2024.

Some analysts expect far more sales growth for Zepbound and Mounjaro beyond 2024. Tirzepatide, the active ingredient in both drugs, has a “very strong shot of being the best-selling molecule of all time in the pharmaceutical industry,” said Guggenheim’s Fernandez.

Wall Street is enthusiastic about Zepbound in part because it may cause more weight loss than Wegovy. Studies directly comparing the two, including an ongoing trial from Eli Lilly, would need to confirm that.

Results from that trial could come out next year after initial data from separate studies examining Zepbound as a potential treatment for other health conditions, including heart failure.

Mixed insurance coverage will likely weigh on sales of Zepbound and other weight-loss drugs in 2024, but Eli Lilly has already secured some coverage for the drug.

Wegovy made history this year when it slashed the risk of serious heart problems by 20% in people with obesity and heart disease in a late-stage trial. In 2024, the drug could shake up the pharmaceutical industry again if U.S. and European regulators decide to approve it for that purpose.

Those potential approvals, which would make Wegovy the first GLP-1 drug to have an expanded use for heart health, are a “foregone conclusion” for Novo Nordisk, Cantor Fitzgerald’s Louise Chen told CNBC.

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