Why the approval of Eli Lilly’s tirzepatide for diabetes will lead to blockbuster sales

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On Friday, Eli Lilly (NYSE:LLY) won approval of Mounjaro (tirzepatide), a novel once-weekly injectable medicine for type 2 diabetes.

Tirzepatide is the first therapy that activates glucagon-like peptide-1 (GLP-1) and glucose-dependent insulinotropic polypeptide (GIP) receptors.

Although the approval in type 2 diabetes itself is significant, where tirzepatide will likely really shine is as a weight-loss treatment.

That’s because in a phase 3 head-to-head trial, tirzepatide bested Novo Nordisk’s (NVO) semaglutide, which as marketed as Wegovy for weight loss. The average weight loss with the maximum recommended dose of Mounjaro was 12 pounds more than with Wegovy.

In Q1 2022, the Danish pharma recorded Wegovy sales of DKK1.4B (~$195.9M). The drug was approved in June 2021.

Because of its superiority over Wegovy, Mounjaro is likely to command a higher price, according to GlobalData Senior Pharma Analyst Samisha Khangaonkar. “As a first-in-class therapy in a novel drug class, with demonstrated significant efficacy, it has the potential to be priced at a premium, and GlobalData has assumed it will be priced at a 25% premium to other once-weekly GLP-1 receptor agonists.”

Lilly gained another boost in April when data from a trial of patients without diabetes showed that tirzepatide led to significant weight loss compared to placebo.

Indeed, Lilly said during its Q1 2022 conference call that tirzepatide is the first medicine to demonstrate more than 20% weight loss on average in a late-stage study.

With 110M people in the U.S. with obesity and 650M worldwide, Lilly has a large potential market for tirzepatide once it receives a weight loss indication.

“I think primarily, our focus is going to be on really driving tirzepatide wins of new patients coming into the class and so that will be our approach going forward,” Lilly Diabetes President Mike Mason said in regards to marketing.

Mason noted that educating doctors and payers that obesity is a chronic disease will help grow the market for the drug, adding that tirzepatide is likely to be a long-term therapy for those who take it.

Lilly is looking at tirzepatide as more than just a diabetes and obesity treatment. It is also in phase 3 for heart failure with preserved ejection fraction (HFpEF) and in phase 2 for non-alcoholic steatohepatitis.