Novo Nordisk shares have reacted positively to the news from rival Pfizer that the company has dropped the development of a twice-daily weight loss pill.

Pfizer’s withdrawal is basically good news for Novo Nordisk and Eli Lilly, which are very strongly positioned in the obesity market. But at the same time, it is a market with plenty of room for more players, says senior analyst Søren Løntoft Hansen from Sydbank.

”It’s bad news for Pfizer, there’s no doubt about that, and basically it’s actually positive news for Novo Nordisk and Eli Lilly. Having said that, I believe that this market will become so large that there is room for more players.”

”But it is clear that the fewer there are, the bigger the market share you will have the opportunity to gain,” Løntoft Hansen says to Marketwire.

Following the news, Pfizer fell 6.7% on the US stock exchange on Friday, while Novo Nordisk in Copenhagen has recovered after a drop of around 2% before the Pfizer announcement.

Eli Lilly began Friday’s trading in the US with an increase of 1.4%.

”Of course, this reflects that investors see that Novo Nordisk and Eli Lilly mainly have the market to themselves. We see some pretty sharp price fluctuations when it comes to obesity, but one can discuss whether the price reaction should be so strong in relation to - at least my expectation - that this pill might only play a minor role in the market after all,” says Løntoft Hansen.

Pfizer’s decision to drop the development of a twice-daily obesity pill was due to side effects that caused many participants in a phase IIb study to stop taking the pill.

Instead, Pfizer will continue working on a once-a-day version of the pill. More data on this alternative is expected to be announced in the first half of 2024, Pfizer writes.

The results of the further studies will show what role Pfizer’s might play in the huge market for obesity treatment.

”I’ve seen a spot for Pfizer, but not a huge spot, but still I see a reasonable business case for Pfizer with a pill. But the fact that they now have to focus on a once-daily pill will obviously delay their entry into this market.”

”And then the question is what the data will show for that pill, both in terms of efficacy, but certainly also in terms of the side effect profile - whether it will see the light of day at all,” says Løntoft Hansen.

(Translated using DeepL with additional editing by Kristoffer Grønbæk)