Dozens of startups jumped into the weight-loss market this year as weight-loss drugs, including Wegovy and Ozempic, exploded in popularity.
But investors and analysts think only a few companies have what it takes to make it big in the market and next year could determine which one comes out on top.
As spotty insurance payments and drug shortages continue to plague startups that prescribe these GLP-1 drugs, investors are hesitant to back more companies focused on writing that prescription, especially the early stages of initiation. Instead, VCs told Business Insider that the healthcare companies best positioned to take advantage of the weight-loss drug craze have been around for years and already boast large platforms.
The few companies with enough money and brand recognition to stand up to the challenges of Ozempic distribution can expect WeightWatchers, Noom, and Ro to compete for market dominance next year.
“Those companies are already at scale, and there’s a competitive landscape now around who’s going to win,” said Sari Kaganoff, the general manager of Rock Health consulting.
How to compare weights
WeightWatchers stands out from Noom and Ro with its 60 years of brand traction. The company announced its acquisition of GLP-1-prescribing platform Sequence in March, bringing talk of Ozempic’s business side into the big leagues.
WeightWatchers had 4 million paying subscribers in the third quarter of this year, earning $203.5 million in revenue over the period. Revenue from Sequence made up just a fraction of that, at $10 million in subscriptions for the third quarter.
But WeightWatchers signaled it was going all in on weight-loss drugs by launching its own behavioral program for Ozempic patients in December. The company says the new program will complement weight loss prescriptions issued through Sequence integration or the patient’s primary care physician. WeightWatchers stock jumped 10% after the announcement.
Like WeightWatchers, Noom has remained a stalwart in the weight-loss market since its launch in 2008. The startup, which focuses on psychology-driven weight loss with behavioral coaching, last raised $540 million in Series F funding in 2021 at a $3.7 billion valuation.
Noom faced significant operational challenges last year, undertaking three rounds of layoffs between April 2022 and January 2023. The startup quietly launched a program that prescribes GLP-1s earlier this year , BI reported in March. Noom then publicly announced the program in May.
Although Noom is the best-funded health care startup focused exclusively on weight loss, it’s unclear how many patients the company has or how its GLP-1-prescribing program has fared against the challenges. in the market.
Ro, in turn, provides care for a variety of conditions outside of obesity. The startup made its name prescribing erectile-dysfunction drugs online, and last raised $150 million in February 2022 at a whopping $7 billion.
Ro launched its own program that prescribes weight-loss drugs in January. The startup has faced many challenges as it grapples with the new care model, and many patients have complained of delayed responses from Ro providers or difficulty getting their medications, BI reported in June.
However, former BI employees said at the time that it showed early signs of becoming Ro’s fastest-growing program ever. Ro told BI in December that it has been continuously improving the program since its launch.
Data and deals will determine who wins
As patients, health plans, and employers grapple with the high cost of GLP-1 drugs, companies that can show their strategies will produce long-term weight loss will have an advantage going forward. that year, analysts told BI.
Clinical trial data show that most patients regain most of the weight they lost while on GLP-1 when they stop taking the drugs. Kaganoff said some companies are betting they can get people to lose weight and keep it off but there seems to be a lack of data to back up that claim.
“Right now, most companies say they can do it, they think they can do it, but they haven’t necessarily published robust peer-reviewed studies,” he said.
Collecting and analyzing real-world data from their patients, then, will be top of mind for these companies next year.
In particular, contracts with employers and health plans may depend on that data as proof of the companies’ ability to save payers money. Both Noom and WeightWatchers provide their platform directly to patients as well as through employers and health plans, while Ro sells its services to patients online only.
Startups like Noom and Ro may also make some acquisitions next year if their programs don’t gain enough traction, said Aaron DeGagne, a healthcare analyst at PitchBook Data.
“A lot of companies will benefit from this opportunity. The market is there, it’s growing, companies will benefit,” Kaganoff said. “It’s just tricky to sort out who has the right model and the right operating team to last.”
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