AstraZeneca joins obesity drug craze as it signs £1.6bn deal with Chinese medical group

AstraZeneca has entered the race to develop a weight-loss drug after striking a £1.6billion deal with a Chinese medical group.

The group signed a licensing deal with Eccogene to create a pill, named ECC5004, which is designed to encourage the body to shed weight and lower glucose levels.

Alongside treating obesity, the company said the drug could also be used to help combat type-2 diabetes and conditions such as heart attacks and strokes.

Under the terms of the deal, the FTSE 100 firm will pay £151million to Shanghai-based Eccogene upfront as well as up to £1.5billion in clinical and other milestones as the drug’s development progresses.

In return, the pharma giant will have the right to market ECC5004 outside China.

China deal: AstraZeneca boss Pascal Soriot (pictured) said that the move into weight loss drugs follows ‘enormous need around the world’

Details emerged just hours after it was revealed that AstraZeneca is facing a multi-million-pound legal battle over claims the efficacy of its Covid vaccine was ‘vastly overstated’.

The company is being sued in the High Court in a test case which could pave the way for as many as 80 damages claims worth an estimated £80million.

Pascal Soriot, chief of AstraZeneca, said he could not comment on any litigation, but added he was ‘saddened’ by people who had suffered from side effects.

He also said that the move into weight loss drugs follows ‘enormous need around the world’ and comes as the battle heats up among the world’s major pharmaceutical firms. 

The Australian-French businessman admitted his firm was ‘a few years behind’ its competitors but added its reach was likely to be much wider. 

AstraZeneca’s weight loss drug is set to be cheaper than rival drugs on the market, making it accessible to both the US and Europe. 

‘We expect the cost of goods to be lower and to be able to reach a larger pool,’ Soriot said.

The race for weight loss drugs was sparked earlier this year when Danish medical group Novo Nordisk began selling Wegovy, a weekly injection, available on the NHS, that tricks the body into thinking it is full. 

Demand quickly exploded and Novo has been struggling to keep up, leaving a gap in the market for others to muscle in. 

But the push has enabled Novo to become the second most valuable company in Europe, behind LVMH, with a market cap of £284billion.

And earlier this week regulators in the US and the UK approved tirzepatide, an injection manufactured by American giant Eli Lilly, which will be sold in Britain under the name Mounjaro. Pfizer is hoping to develop its own version.

Spending on weight loss treatments is set to balloon to around £80billion over the next decade amid soaring obesity rates. 

Around 64 per cent of UK adults are obese or overweight, a figure that rises to 70 per cent in the US. More than a billion people globally are obese.

The stock jumped 2.6 per cent, or 266p, to 10,436p in response. 

However experts have warned that treatments should not be considered a quick fix or substitute for a healthy lifestyle, while studies have shown that patients who stop taking the drugs can quickly pile the pounds back on.

The announcement came as AstraZeneca upgraded its full-year profit forecasts following strong demand for its cancer drugs. 

It now expects its core earnings per share to rise by a ‘low double-digit to low-teens percentage’, up from previous forecasts of high single-digit to low double-digit percentage growth.

Revenues were also expected to rise by ‘a low-teens percentage’ versus prior estimates of a low-to-mid single-digit increase. Results for the third quarter of 2023 saw revenues climb 5 per cent to £9.4billion.

This post first appeared on Dailymail.co.uk