00:00About nine months ago or so, the companies across the board, Novartis has just talked about this thing about most favored nations, and it's not that their prices in the U.S. are necessarily across the board being cut, but a lot of pharma companies, Johnson & Johnson, Pfizer, and Roche didn't refer at all to anything to do with this most favored nations, but these companies are now.
00:27So what happened is that Novartis has gone in, talked to the administration, and so did Eli Lilly, so it's going to be interesting to see how they report today, later on today.
00:39And they've come up with a lower price for a certain group of people, lower cash price through their own channel, NovoCare, and the company had said, starting from Q3, that these price cuts are going to impact 2026.
00:55And they repeated that point at the JP Morgan conference when they were asked that question about pricing.
01:02So the question is, why is the market reacting like this?
01:05Had they not signaled sufficiently the depth of price cuts, or had the market not wanted to listen?
01:12And I think it's possible that it's a mix of both, that we had been a bit too optimistic about the potential pressure on prices, and then maybe people were thinking, okay, when the price pressure comes, the volume will go up.
01:26That is what we've always been talking about, and I think that is going to be a reality.
01:30The point is, it's the disjointed impact that's upsetting people today.
01:35Talk to us about the competition, too, in this space, too, which is, of course, another big factor that Novo has been facing.
01:42They were the big players, and that, I suppose, share has been shrinking as others, you know, bring their treatments online.
01:48Yeah, I mean, it must be remembered, for want of a better phrase, that Novo is the company that brought the first GLP one to market, and that was Victoza all those years ago, for diabetes.
01:59But, you know, history is that. Lilly caught up with them really fast.
02:04Lilly took a gamble on a new molecule called tezepatide, which biologically surprised everybody the way it worked.
02:11It wasn't supposed to work like that, what everybody had thought, you know, by combining two molecules, GIP and GLP.
02:18So, and they stole the show with the much better efficacy that they're getting in the head-to-head trial, even.
02:23So, that is the only competition these companies have. They're competing with each other.
02:27None of the other players have really come to market with an obesity drug.
02:31Well, I mean, there's a long way to go yet.
02:33Pfizer, as we saw yesterday, had to report some data.
02:35There's lots of data coming, but just Lilly and Novo are doing most of this competition together in this space.
02:43And Lilly's drug has proven to be better.
02:46Let's see whether they've picked up volume as the prices have been going down.
02:50So, it's going to be good. Lilly's share price dropped yesterday also.
02:53So, that was obviously nothing like Novo notice.
02:56In terms of, then, the medium-term outlook, I mean, it's just such a huge growth market globally with such intense pressure.
03:07With all your knowledge of the sector, medium-term, how should investors think about it?
03:13If you say that they haven't quite understood the messages, maybe, or there's some confusion about why the share price is dropping as much as it is, what's the medium-term view?
03:21The medium to long-term, if I could just add that to it, is that the demand is there.
03:27There are, you know, there are a lot of people who wish folk could lose weight without resorting to a pharmacological agent.
03:34But we know that that's not been the reality.
03:39The reality is that we can reduce healthcare impact by helping people lose weight.
03:43And I'm not talking about the look and feel.
03:45I'm talking about a real obesity solution.
03:47So, that demand is there.
03:49I think governments would want to see it.
03:52Employers would want to see and have a healthier workforce.
03:55All of that's still there. Nothing's changed.
03:57Now, the question is, as the price goes down, you would expect more people to be able to afford it, more governments to be able to afford it.
04:04If that's the case, when are we going to see that uptick?
04:07I don't think the demand side is going to necessarily change, except that it should go up as these prices go down.
04:16Let's see when that turns into reality.
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