China will be a huge market for weight-loss drugs

Weight-loss drugs are big business. Novo Nordisk’s blockbuster offering Wegovy is expected to be approved for sale in China this year. That would be another boost for the Danish company. But battered local drugmaker shares have even bigger upside potential.

Demand for weight-loss solutions is high in China, where obesity rates among Chinese adults have also more than doubled in less than two decades. The proportion of adults classified as overweight and obese in China reached 50.7 per cent in 2022.

Wegovy can lead to weight loss because it suppresses the appetite by mimicking the actions of a gut hormone called GLP-1. This class of drugs was originally designed to treat type 2 diabetes. Nomura estimates China’s GLP-1 market could grow at 23 per cent a year — faster than the global average — to $11.4bn in 2033.

The problem for Novo is that its patent for Wegovy in China is due to expire in 2026. For sure, analysts still expect strong sales growth. Its 2030 obesity and diabetes sales in China are expected to reach $4.8bn, or 7 per cent of the global total, according to Visible Alpha.

But there is an opportunity for local pharma groups. Nomura reckons they could take a fifth of the market by 2033. Currently there are more than 100 GLP-1 pipeline drugs under development.

These locally-made drugs are not far off hitting the market. Those from Chinese groups Shanghai Benemae Pharmaceutical and Huadong Medicine have recently received approval. Suzhou-based biotech group Innovent has the Chinese rights to a promising next generation obesity drug from Eli Lilly called Mazdutide. It announced positive late-stage trial results in January.

Rivals such as Hua Medicine and China’s largest vaccine maker Zhifei, which have been developing diabetes treatments, would have a head start. Shares of Huadong Medicine and Hua Medicine are down a quarter in the past year, along with a broader slump in the sector as stocks normalise following a pandemic surge.

These groups are already seeing a rapid growth in demand. China’s diabetes drug market is expected to more than double in the next six years to more than $23bn. China accounts for about a quarter of the global diabetic population. It also has one of the highest proportions worldwide of overweight and obesity among children under five.

For copycat drugs, price will be a big selling point. That is not just an issue for the domestic market. Given the cash-strapped state of many healthcare systems, cheaper Chinese-made versions may have considerable room for growth overseas.

june.yoon@ft.com