Speaking to BioSpace at the J.P. Morgan Healthcare Conference, Novartis’ chief dealmaker Ronny Gal explains why the Swiss pharma hasn’t acquired a GLP-1, and why it probably won’t.
Novartis doesn’t have a GLP-1. But it’s not for lack of trying on the part of intrepid biotechs.
“I will not tell you the number of emails or conversations I had around, ‘Wouldn’t you like to have a GLP-1 with 2% better efficacy than the existing leading compounds? My product is a month-long versus a week-long, things like that,” Ronny Gal, Novartis’ chief strategy and growth officer, told BioSpace on the sidelines of the J.P. Morgan Healthcare Conference on Tuesday.
But Novartis doesn’t want to just be a ‘me-too.’ Gal likens the situation with GLP-1s to what’s happening in China, where a burst of innovation has led to concerns about the real gains being made there and whether many drugs are simply offering incremental improvements over existing options, particularly in oncology.
“The trap of me-too is not unique to China,” Gal said, holding up his can of Pepsi—the ultimate me-too product—for emphasis.
Every industry gets into a cycle of me-too products once one is successful. For a company like Novartis, acquiring such a product can be okay—Gal is not ruling out picking up an asset that offers a small improvement. But “it’s a harder strategy to follow and be successful with,” he said.
Gal said drug program acquisitions typically involve one of three types of risk: scientific, developmental and commercial.
A me-too product can lower the first two types of risk. With an existing product to point to, drug developers have a clinical precedent and lessons learned. The regulatory leg work has also been done if the first product is already approved.
But marketing a product that has a major competitor raises the commercial risk. Will patients or providers switch? Is there enough of a market left over to find a niche? That commercial risk can take much longer to show up, whereas development and R&D risk is “very binary,” Gal explained. That’s why Gal and his team at Novartis are careful about me-too products.
“As a pharma company, we want to make sure that the leadership team at Novartis does our jobs to make sure we balance out those risks,” he said. “So me-too is something that we will do, but we will basically do less commonly, because we do not want to be in a situation where all our risk is commercial risk.”
That’s not to say that Novartis has written off the GLP-1 class or weight loss altogether. To get Gal interested, he said an asset would have to demonstrate substantial benefit over existing options—mainly, Eli Lilly’s Zepbound and Novo Nordisk’s Wegovy.
“But it is an area that is very well served by existing companies,” Gal said. “We are yet to see a transaction in that area that makes sense for us to go into.”
Another factor is pricing. Novo and Lilly have both lowered the cost of their therapies to a few hundred dollars a month, broadening access even as payers continue to balk at coverage. Gal pointed to the consumer impact that has made that possible.
“The argument that the core demand of patients is not being met is not what we’re convinced about,” he said. “I think [for the] majority of patients, the current generation of GLP-1s are probably good enough.”
Still, Gal noted that there are about 30 similar compounds in the clinic right now. Novo just launched a pill version of Wegovy. That therapy is being marketed with a simple ad around San Francisco—a hand holding a small, round tablet with text that reads, “The Pill Is Here.”
While obesity is a common disease, Gal said another limiting factor is that it’s mostly a single disease. In oncology, for example, there are many niche indications to be found across tumor types, stages and gene expression. GLP-1s have been shown to work for almost anyone that takes them, he said—aside from tolerability concerns that can vary between patients.
Now, companies are battling for incremental changes or product features, Gal continued—improvements in tolerability, slight single-percent increases in weight loss achievement.
“What’s the saying? A smart person can get out of trouble. A wise person wouldn’t walk into [it]. . . . We simply try to be thoughtful about the kind of risk we’re taking, and that one, we just can’t find an asset that makes sense for us.”
