Pfizer adds to obesity bet with up to $2.1 billion deal to develop Chinese company's pill

Core Insights - Pfizer has entered into a licensing agreement worth up to $2.1 billion with YaoPharma to develop and commercialize an obesity pill, enhancing its presence in the weight loss market [1][2] - The deal includes an upfront payment of $150 million to YaoPharma, with potential milestone payments of up to $1.94 billion and tiered royalties on sales if the drug is approved [2] - YaoPharma's drug targets the GLP-1 hormone, similar to Novo Nordisk's Wegovy, but is still in early-stage development, indicating a multi-year timeline before reaching patients [2] Company Strategy - This agreement allows Pfizer to diversify its obesity drug pipeline following setbacks from scrapping two previous pills in the last two years [3] - Pfizer's recent acquisition of obesity biotech Metsera for up to $10 billion further strengthens its competitive position in the obesity treatment space [3] - Pfizer plans to combine YaoPharma's treatment with its own mid-stage drug targeting the GIP hormone, following a dual approach similar to Eli Lilly's products [5] Market Potential - Analysts suggest that the weight loss drug market could be valued at approximately $100 billion by the 2030s, presenting a significant opportunity for Pfizer [6] - BMO Capital Markets analyst noted that the limited information on YaoPharma's drug does not diminish the promising short-term diversification potential for Pfizer in the obesity sector [6] - The $150 million upfront payment is seen as a prudent move in light of recent competitive bidding for Metsera [6]