The news: Pfizer beat Novo Nordisk in the battle to acquire obesity drugmaker Metsera in a deal worth over $10 billion.

Catch up quick: Pfizer struck a deal in September to buy Metsera for about $7.3 billion. But about a month later, Novo swooped in with a better offer that made Metsera reconsider, triggering a bidding contest.

Pfizer came out on top with an offer nearly 40% higher than the original acquisition price. Metsera said Novo’s bid carried more risk because the FTC warned it could violate US antitrust laws, given Novo’s position as one of two dominant players in the weight loss drug market. The FTC has already approved Pfizer’s acquisition of Metsera.

Why it matters: Pfizer has been unable to penetrate the weight loss treatment category despite its internal drug development efforts.

• Pfizer ended development of its once-daily pill earlier this year due to a study participant experiencing a liver injury that the drug may have caused.
• In 2023, Pfizer discontinued a twice-daily oral candidate since trial patients were experiencing high rates of adverse side effects.

Now, Pfizer has a promising opportunity to enter the lucrative weight loss category with Metsera’s obesity drug candidates. Metsera is currently testing a weight loss drug that would be taken monthly, rather than weekly. Metsera also has oral weight loss products in its pipeline, as well as an alternative hormone called amylin that may have fewer side effects than GLP-1s. It’s worth noting that none of Metsera’s drug candidates have been approved yet, but it recently released early clinical trial data showing that its amylin injectable achieved 8.4% weight loss in 36 days with a favorable tolerability profile.

Implications for the weight loss drug market: Regulators will keep a close watch on mergers to ensure competition in the obesity drug category that could reach $150 billion within 10 years.

A competitive market spurs treatment innovation by incentivizing companies to make more effective and differentiating products. Leading weight loss drug manufacturers Novo and Eli Lilly will have to lean further into organic development and seek additional clinical indications beyond obesity, while Big Pharmas without weight loss treatments and smaller players could be better off pursuing partnerships and M&As.

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