Merck to develop weight loss pill from Chinese drugmaker in up to $2 billion licensing deal

Merck on Wednesday said it has snagged the rights to an experimental weight loss pill from Chinese drugmaker Hansoh Pharma, in a deal worth up to $2 billion.

The oral drug has not yet entered human trials, and Merck did not specify which diseases it plans to test the drug on first. Still, it boosts the pharmaceutical company’s chances of winning a slice of the booming obesity drug market, which some analysts expect to be worth more than $100 billion a year by the early 2030s.

Several other drugmakers, including Pfizer and Roche, are racing to develop more convenient obesity pills that can compete with blockbuster injections from Novo Nordisk and Eli Lilly.

Under the terms of the deal, Merck will gain the exclusive global license to develop, manufacture and commercialize Hansoh Pharma’s HS-10535, an experimental oral drug that targets a gut hormone called GLP-1. Novo Nordisk’s popular weight loss drug Wegovy and diabetes treatment Ozempic similarly target GLP-1 to tamp down appetite and regulate blood sugar.

Merck will pay Hansoh $112 million upfront for rights to the drug, with the potential for an additional $1.9 billion in milestone payments and royalties on sales, according to a news release.

Merck said a pretax charge of $112 million, or 4 cents per share, will be included in its fourth-quarter results.

In the release, Dean Li, president of Merck Research Laboratories, said the oral drug has “potential to provide additional cardiometabolic benefits beyond weight reduction.”

Merck CEO Rob Davis early last year said the company was seeking GLP-1 treatments with benefits beyond weight loss.

“I think everyone recognizes weight management is a hard thing to get reimbursed. But if you can show cardiovascular outcome, if you can show diabetes outcome, which you’re starting to see data for, if you can see fatty liver disease benefits … that is an area where we think there’s opportunity,” he said at a conference at the time.

It is the latest transaction involving experimental GLP-1 drugs from China. AstraZeneca last year licensed Chinese company Eccogene’s experimental oral drug, which has since moved into mid-stage development.