In a decisive step to capitalize on the rapidly expanding obesity drug market, Merck & Co. has entered into a comprehensive licensing deal with Hansoh Pharma to develop and commercialize HS-10535, an investigational oral obesity treatment. While the current market for weight-loss therapies is dominated by injectable GLP-1 receptor agonists—such as Novo Nordisk’s Ozempic and Wegovy and Eli Lilly’s Mounjaro—Merck’s move could change the landscape by delivering a patient-friendly pill formulation. The agreement, which grants Merck exclusive global rights to develop, manufacture, and commercialize HS-10535, involves a $112 million upfront payment and subsequent milestone payments that could bring the total value close to $2 billion. As the global GLP-1 market, valued at approximately $49.3 billion in 2024, continues to surge and the broader obesity drug sector potentially reaches $200 billion by 2031, this strategic collaboration positions Merck at the forefront of innovation in weight-loss solutions.
1. Strategic Analysis of the Deal
Merck’s newly inked agreement with Hansoh Pharma underscores the U.S. drugmaker’s strategic push into the booming obesity treatment sector. Under this deal, Merck will pay Hansoh an initial $112 million for the rights to HS-10535, a small-molecule GLP-1 receptor agonist. The drug is currently in preclinical development and has not yet been tested in human clinical trials. However, its key differentiator lies in its oral formulation—offering a potentially more convenient route of administration compared to many existing GLP-1 therapies that require injections.
The partnership’s value could climb significantly if HS-10535 progresses successfully through clinical development and regulatory approval. In total, the deal could reach up to $2 billion, factoring in approximately $1.9 billion in milestone payments and additional royalties on future product sales. By securing exclusive global rights, Merck aims to leverage its robust manufacturing capabilities and extensive marketing infrastructure to bring HS-10535 to a diverse, worldwide patient population.
By collaborating with Hansoh, a leading Chinese biotech, Merck also hopes to gain valuable insights into emerging markets such as China, where obesity rates are increasing. The synergy between Hansoh’s research strengths and Merck’s global reach could accelerate development timelines and expand patient access. As the industry races to deliver more patient-friendly weight-loss options, this strategic move could offer Merck a head start in an intensely competitive environment.
2. Competitive and Market Dynamics
The GLP-1 drug category has soared in recent years, propelled by blockbuster injectable treatments like Novo Nordisk’s Ozempic and Wegovy and Eli Lilly’s Mounjaro. Yet convenience and patient preference are increasingly shaping market demand. While injectable GLP-1s deliver strong efficacy, their mode of administration can deter some patients. This has prompted a scramble among pharma heavyweights to develop oral alternatives that replicate or surpass injectable efficacy without needles.
Merck’s entry into the oral obesity arena comes at a pivotal time. The global GLP-1 market, valued at around $49.3 billion in 2024, is on a trajectory to expand dramatically. Analysts project the broader obesity drug market could reach $200 billion by 2031, reflecting the urgent public health need for effective treatments. Competing firms such as Pfizer and Roche are also exploring oral obesity medications, signaling a future marketplace crowded with innovative contenders.
Despite the fierce competition, Merck’s HS-10535 holds promise. If this oral GLP-1 receptor agonist can demonstrate safety, efficacy, and dosing convenience comparable to or better than existing treatments, it may carve out a significant niche. Early investor optimism is evident: Merck’s shares rose 1.1% in pre-market trading following the announcement. Success in this arena could reset patient expectations, making oral therapy the norm and eroding the dominance of injectable incumbents.
3. Predictions and Impacts
Short-Term (1-2 Years):
The immediate focus will be on advancing HS-10535 into clinical trials. With the drug still in preclinical stages, Merck and Hansoh must generate robust safety and efficacy data to secure regulatory approvals. During this time, Merck will record a $112 million pre-tax charge—equivalent to around 4 cents per share—in its fourth-quarter financial results. As initial human trial data emerge, investor sentiment and competitor strategies could shift. Early indications of success would strengthen Merck’s position and potentially attract attention from regulators eager to broaden treatment options for obesity.
Medium-Term (3-5 Years):
Assuming strong clinical results and regulatory clearance, HS-10535 could launch commercially within five years. By then, new entrants are likely to have emerged, intensifying competition among oral GLP-1 treatments. Market share will hinge on efficacy, safety, cost, and patient adherence. If HS-10535 outperforms in these areas, Merck could secure a robust portion of the booming obesity drug market. The drug’s oral formulation could be especially appealing in emerging markets, including China, where Hansoh’s local expertise can facilitate rapid adoption.
Long-Term (5+ Years):
Over the long haul, a successful HS-10535 could help redefine obesity care standards. As more patients seek convenient solutions, oral GLP-1s may gain widespread acceptance, potentially pushing injectables to a secondary position. This shift could pave the way for even more innovation, such as combination therapies that target multiple metabolic pathways. Should HS-10535 prove to be a blockbuster, Merck’s strategic gamble may pay long-term dividends, establishing the company as a leader in the metabolic health arena while reshaping global prescribing habits.
4. Challenges and Risks
While the potential is vast, achieving it is far from guaranteed. First, HS-10535 must demonstrate that it can match or exceed the performance of well-established injectable therapies—no small feat. Regulators and clinicians will demand compelling evidence of efficacy and safety, particularly given the sensitive nature of obesity treatments and their long-term health implications.
Moreover, as competition mounts, price pressure will intensify. Scaling up manufacturing to meet global demand will require significant resources, and maintaining a reliable supply chain is critical. If HS-10535 enters a crowded field of similarly efficacious oral GLP-1s, profit margins may tighten. Merck must also navigate complex reimbursement frameworks and ensure broad access to realize the therapy’s full commercial potential.
Lastly, market expectations have soared as obesity treatments have gained unprecedented attention. Should clinical data fall short, or if regulatory approvals are delayed, investor enthusiasm could dampen. The road to commercial success is paved with significant scientific, regulatory, and market-based uncertainties.
Conclusion
Merck’s decision to acquire exclusive global rights to HS-10535 from Hansoh Pharma is a bold and potentially transformative move in the high-stakes world of obesity drug development. By investing an initial $112 million, with the possibility of paying up to $1.9 billion in additional milestones and enjoying future royalties, Merck signals its determination to shape the next era of weight-loss treatments. This endeavor taps into a rapidly expanding market, where the global GLP-1 segment is already valued at $49.3 billion and the broader obesity drug market may reach $200 billion by 2031.
As Merck advances HS-10535 from preclinical studies to (hopefully) regulatory approval and market launch, it aims to deliver a convenient oral option that could redefine patient adherence and satisfaction. Although competition is stiff—Pfizer, Roche, and others are also in pursuit—the unique partnership with Hansoh, along with Merck’s global footprint, could be a game-changer. If successful, HS-10535 will not only bolster Merck’s portfolio but also challenge the dominance of injectables, making the promise of effective, patient-friendly oral obesity treatments a reality.