Pfizer Tries to Fatten Its Profits With Weight Loss Drugs

Eli Lilly (NYSE:LLY) and Novo Nordisk (NYSE:NVO) dominate the market for weight loss drugs. The monopoly has proven incredibly profitable for both companies. Consider that in the last quarter, LLY reported that $8.58 billion of its $15.56 billion in total revenue came from its two GLP-1 weight loss drugs Mounjaro and Zepbound.

Even a greater percentage of NOVO’s sales and earnings comes from their weight loss drugs. Pfizer (NYSE:PFE) has attempted to compete with LLY and NOVO, but thus far has been unsuccessful. To wit, Pfizer scrapped research on its experimental pill Danuglipron due to serious concerns regarding liver damage. Pfizer has changed its tack and is now offering to pay up to $7.3 billion for Metsera (NASDAQ:MTSR).

Unlike LLY and NOVO, MTSR} doesn’t have an approved weight loss drug on the market. However, it does have four clinical-stage programs, of which one is now in the FDA’s Phase 2 of development. It is expected that some of these drugs could start producing revenue as early as 2028 or 2029. Per the WSJ:

Analysts at Leerink Partners said they think Metsera’s differentiated obesity drug candidates could generate more than $5 billion in combined peak sales.

Pfizer needs to fortify its future revenues. Per the WSJ, they face a “steep patent cliff,” with numerous drugs, including its pneumonia vaccine Prevenar 13, set to lose patent protection in 2028. The graph below shows that since May 2022, when LLY’s Mounjaro was approved for sale by the FDA, its stock price has increased by approximately 150%. Over the same period, Pfizer shares have been cut in half.

Is it any wonder that Pfizer is desperate to fatten its profits with weight loss drugs?

Another Recession Warning Is Flashing Red

It appears that over the past few years, many reliable recession warnings have proven to be inaccurate. For instance, the yield curve inverted and then un-inverted, which has always resulted in a recession. Leading Economic Indicators (LEI) have been declining for four years and sit below 2020 levels.

The ISM manufacturing index has been signaling a recession for four years to no avail. Today, we present yet another. Whether it’s a false warning or something that warrants attention, we will find out in time.

The three-month percentage change in aggregate hours worked in the private sector is down 0.2% over the past three months. As is highlighted with red circles, all but two of the eleven prior instances with a negative reading have been accompanied by a recession. The two false warnings were in 1985 and 1995.

Is this another false warning like so many we see? Could it be due to increased productivity due to AI? Or is this a recession warning we need to take seriously?

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