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Merck Signs $2 Billion Licensing Deal for Weight Loss Pill with Chinese Drugmaker Hansoh Pharma

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Merck announced on Wednesday that it has secured the rights to an experimental weight loss pill from Chinese drugmaker Hansoh Pharma in a deal worth up to $2 billion. This oral drug, currently not in human trials, could position Merck to capitalize on the rapidly expanding obesity drug market, which analysts predict could exceed $100 billion annually by the early 2030s.

While Merck did not specify the diseases it plans to target first with this drug, the deal significantly boosts its potential in the obesity treatment field. The move comes as several other pharmaceutical companies, including Pfizer and Roche, are working to develop competitive oral weight loss medications that can challenge the blockbuster injectable drugs from Novo Nordisk and Eli Lilly.

Under the terms of the agreement, Merck will receive exclusive global rights to develop, manufacture, and commercialize Hansoh Pharma’s HS-10535, an oral drug targeting GLP-1, a gut hormone. GLP-1 is the same target for Novo Nordisk’s popular weight loss drug Wegovy and diabetes medication Ozempic, which work by suppressing appetite and regulating blood sugar levels.

Merck will pay Hansoh Pharma an upfront fee of $112 million for the licensing rights to the drug. Additionally, the deal includes up to $1.9 billion in milestone payments and royalties on future sales, according to a press release from the company.

Merck’s president of Research Laboratories, Dean Li, expressed confidence in the drug’s potential, noting it could offer “additional cardiometabolic benefits beyond weight reduction.” The company has been actively seeking GLP-1 treatments that provide not just weight loss but other health benefits, such as improvements in cardiovascular health, diabetes, and fatty liver disease. Merck CEO Rob Davis highlighted this strategic focus in early 2023, stating that therapies with broader health benefits would be crucial for obtaining reimbursement and establishing long-term market success.

This agreement with Hansoh Pharma adds to the growing trend of Chinese companies entering the global market for GLP-1-based treatments. In a similar deal last year, AstraZeneca licensed an experimental oral GLP-1 drug from Chinese company Eccogene, which is currently in mid-stage development.

 

Merck Strikes $2 Billion Deal with Hansoh Pharma for Oral Weight-Loss Drug

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Merck (MRK.N) has entered a licensing agreement worth up to $2 billion with Chinese biotech firm Hansoh Pharma (3692.HK) for the development of an experimental oral weight-loss drug, HS-10535. This move positions Merck as a new competitor in the race to deliver an alternative to injectable weight-loss treatments.

Details of the Agreement

Under the agreement, Merck will assume responsibility for developing, manufacturing, and commercializing the drug. Hansoh’s HS-10535 is a GLP-1 receptor agonist candidate, designed to emulate the effects of injectable weight-loss drugs like Novo Nordisk’s Wegovy and Eli Lilly’s Mounjaro.

Merck will pay Hansoh an upfront fee of $112 million for the exclusive license, with potential milestone payments of up to $1.9 billion based on development, regulatory progress, and sales achievements. Hansoh will also receive royalties on future sales.

Competitive Landscape

Merck faces stiff competition in the burgeoning weight-loss market. Its oral drug candidate will likely trail behind rivals such as Eli Lilly’s orforglipron, which is further along in development. Other pharmaceutical giants, including Pfizer, Amgen, and Structure Therapeutics, are also testing oral obesity treatments, while AstraZeneca has partnered with China’s Eccogene on a similar initiative.

HS-10535 is currently in the preclinical testing phase, focusing on animal studies, meaning it could be several years before it reaches commercial availability. However, Merck sees potential in the drug not only for weight loss but also for delivering cardiometabolic benefits, according to Merck Research Laboratories president Dean Li.

Merck’s Broader Strategy

This deal reflects Merck’s broader focus on second- and third-generation weight-loss treatments, particularly oral solutions that may offer added convenience over injectables. Beyond HS-10535, Merck is also developing efinopegdutide, a GLP-1 candidate targeting metabolic dysfunction-associated steatohepatitis (MASH), a severe fatty liver disease associated with obesity.

Despite entering the weight-loss race later than its competitors, Merck aims to carve a niche in the field by emphasizing treatments that address obesity-related conditions alongside weight reduction.

Market Response and Implications

Shares of Merck rose slightly to $100.80 in premarket trading following the announcement. Analysts, however, expressed concerns about the timing, as Merck’s drug will likely lag behind more advanced contenders.

Weight-loss treatments, particularly GLP-1 receptor agonists, are shaping up to be a multibillion-dollar market, driven by increasing global demand for effective and convenient solutions to obesity. The licensing deal with Hansoh signifies Merck’s commitment to becoming a key player in this competitive market.