Entry into the anti-obesity drug industry: Roche raises the stakes

In just two years, Roche has fallen far out of the medal ranks in the world rankings of the most valuable pharmaceutical companies. Now, of course, the people of Basel are forced to significantly increase their stakes in order to quickly return to the top.

Less than three months after Roche entered the chronic inflammatory bowel disease market for more than $7 billion, the company is already announcing its next multibillion-dollar acquisition.

The takeover of the Californian research company Carmot, which, when founded fifteen years ago, was committed to developing special molecules to combat obesity, will cost approximately $3 billion. Carmot is very trendy now.

America’s Eli Lilly and Denmark’s Novo Nordisk are so far the only two pharmaceutical companies that can chemically replicate the properties of special digestive hormones called incretins and convert them into marketable drugs for the treatment of obesity.

The effect of these molecules, which have long been known from current therapies against diabetes in old age (diabetes 2), is groundbreaking. In numerous trade journals you can read the voices of doctors who believe that the new therapy has the potential to achieve a weight loss of 15 to 20 percent within a short time.

Demand is correspondingly high. It is too high for the two providers to fully cover it. And this despite the fact that the medicines sold under the names “Wegovy” and “Mounjaro” are not yet reimbursed by all health insurers.

Eli Lilly now leads the world’s ranking of the most valuable pharmaceutical companies with a market capitalization of $554 billion, followed by Novo Nordisk with $450 billion – miles ahead of Roche ($225 billion), which until recently could look down on its two competitors. Roche shares went steeply downhill after Covid.

Since 2022, the residents of Basel have had to deal with billions in losses due to declining sales of corona tests. At the same time, their cancer franchises Avastin, Herceptin and Rituxan, which have been extremely successful for many years, continue to lose sales after the patents expire.

Roche boss Thomas Schinecker continually emphasizes the enormous growth potential that still exists in Roche’s existing drug portfolio and which is being underestimated by the stock market. But the family business obviously no longer wants to rely solely on its own research pipeline.

Schinecker admits that the group does not provide sufficient resources in the final phase of the clinical trial (Phase III). He also sees certain shortcomings in the focus of his own research on projects that have the potential to set the highest standards in the corresponding therapeutic areas (“Best in Class”). Against this background, the German manager has been working hard for some time on the efficiency of his own research. At the same time, he is also trying to give it a boost through acquisitions.

The name ‘CT-388’ also refers to a molecule in Carmot’s portfolio that Roche says has a ‘best-in-class profile’. CT-388 has demonstrated substantial weight loss in patients with and without age-related diabetes, but the molecule is only in the early stages of clinical development. It will take some time before this becomes a marketable drug.

The potential for effective anti-obesity therapies, not identified solely by Roche, is currently estimated at approximately $100 billion. However, such predictions should be viewed with caution, as it is possible that soon there will be a real rush on the market with falling prices. It would not be a surprise if drug approval authorities became more restrictive as demand increased.

These may also have been important motives for having Carmot taken over by Roche. According to American media reports, Carmot had just joined the candidates for an IPO on the Nasdaq in New York. On the one hand, the fact that investors now favor Roche’s offering could be seen as an indication that obesity medicine is not a business for small research companies. However, the sale can also be seen as a warning that a broader group of investors may not recognize the potential identified by Roche. (aargauerzeitung.ch)