Dive Brief:

• Pfizer will pay Chinese drugmaker YaoPharma $150 million for rights to an experimental obesity pill as the company works to catch up in a market dominated by Eli Lilly and Novo Nordisk.
• The deal, announced Tuesday, includes as much as $1.94 billion in further payments for reaching certain developmental, regulatory and commercial milestones. YaoPharma, a unit of Shanghai-based Fosun Pharma, will also be eligible for royalties if the drug reaches the market.
• The GLP-1 agonist, dubbed YP05002, is currently in Phase 1 testing and YaoPharma will continue that research, Pfizer said. The New York-based drugmaker will be responsible for further development and says it plans to conduct combination studies with one of its own pipeline drugs, PF-07976016, a different type of obesity treatment currently in Phase 2.

Dive Insight:

Pfizer is struggling to regain traction after the end of the coronavirus pandemic eviscerated sales of its successful COVID-19 products. Pfizer’s stock is trading at less than half of the highs reached in late 2021 when its Comirnaty vaccine was raking in billions of dollars.

By late 2023, Pfizer’s results were falling short of Wall Street expectations. The company began cutting costs and looking to other areas for growth, including a $43 billion takeover of Seagen that led to a new business unit dedicated to cancer research.

The surging obesity market was an obvious target for Pfizer. But the company’ initial attempts to gain entry fell flat as two experimental oral medicines weren’t safe enough to warrant further development. Pfizer has more recently turned to dealmaking for help, winning a bidding war with Novo Nordisk to take over obesity drug developer Metsera for $10 billion.

YaoPharma’s medicine offers Pfizer another shot at an oral version of the popular injectable GLP-1 drugs. According to Leerink Partners analyst David Risinger, YP05002 is different than one of Pfizer’s failed medicines, danuglipron, with a chemical scaffold similar to a treatment called orforglipron being advanced by Lilly.

Still, Lilly and Novo are far ahead in the race to advance oral GLP-1 medicines. Novo is hoping for Food and Drug Administration approval of the pill version of its Wegovy medication this month. And Lilly is looking for an FDA decision on orforglipron in the first half of next year after winning one of the agency’s new review vouchers for the drug.

Pfizer’s decision to tap into China is part of a broader movement among U.S. companies to license drugs from a market with more regulatory flexibility and lower costs. Earlier this year, Pfizer inked a deal with the Chinese biotechnology company 3SBio that included an upfront payment of $1.25 billion for a dual-targeting cancer treatment.