Share Prices & Company Research


06 February 2024

Market Round-Up

The competition to develop the next breakthrough drug in the rapidly evolving weight loss market is heating up as Zealand Pharma and Boehringer Ingelheim hope their product can hit the shelves soon. Their co-developed drug, survodutide, has recently moved onto phase III, which is usually the last stage before receiving regulatory approval, although trials in this stage can occasionally drag on for years.

Like Novo Nordisk’s Wegovy drug, survodutide works by mimicking an appetite supressing gut hormone called glucagon-like-peptide-1 (GLP-1), helping to reduce a patient’s caloric intake and, in turn, their weight by approximately 20%. Survodutide also activates the body’s glucagon receptors, which could render the drug useful in combating NASH – the most severe form of non-alcoholic fatty liver disease.

If approved, Zealand Pharma would receive around 10% in royalties from future sales, possibly providing it with a lucrative source of income in the profitable obesity-loss drug market. The sector currently has a value of US$6bn but this could potentially reach US$100bn in value by 2030, according to Goldman Sachs researchers. Consequently, many other pharmaceuticals companies are trying to get a piece of the action, with AstraZeneca and Ecogene signing a US$2bn agreement in November to develop an oral obesity drug, while Roche purchased drug developer Carmot Therapeutics for US$3.1bn in December.

Novo Nordisk is currently the market leader, benefitting from its first mover advantage, with Eli Lilly trailing behind in second. However, as new contenders enter the ring, the situation could change drastically over the coming years. 
UK government borrowing in December was almost half the figure predicted by the Office for Budget Responsibility (OBR). £7.8bn was added to the UK debt pile in the last month of 2023, compared to the projected £14bn.

The main reason behind this was a reduction in index-linked UK government bond (gilt) interest rates. This is because the coupon of an index-linked gilt is determined by the rate of inflation, specifically the Retail Price Index (RPI), which has been decreasing steadily from a peak of 14.2% in October 2022 to 5.2% in December 2023. Consequently, the Government needed to pay out less to index-linked gilt holders, meaning the cost of servicing its debt fell.              

Currently, the Government is set to undershoot the OBR’s borrowing prediction of £123.9bn for the 2023-24 fiscal year by £5bn, which could provide the Chancellor with more fiscal flexibility to announce further tax cuts in the upcoming Spring Budget. However, consideration would have to be given to future budgets, as net debt stands at 97.7% of gross domestic product (GDP), having exceeded 100% of GDP in May 2021 for the first time since 1963.
Please note that this communication is for information only and does not constitute a recommendation to buy or sell the investments mentioned. Investments and income arising from them can fall as well as rise in value. The information and views were correct at time of publication but may have changed at point of reading.
Market Round-Up
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