Are GLP-1 drugs a band-aid or a durable solution for modern consumers?

This post will be different from the usual post (focused on a company fundamentals). I'll aim to dive deeper on what is exactly diabete, how GLP-1 drugs solve for it (and accidentally solve for obesity, which is a driving factor of diabete).

Next, I will shift to how Novo Nordisk products compare versus its competition (mainly Eli Lilly) by looking at its drug effectiveness, side effects and convenience.

Diabete 101
Let's start with some science primers. Glucose is an energy source for our cells, which transforms glucose into energy. When we eat, and let glucose enter our body, the pancreas is in charge of monitoring and regulating the glucose by releasing 2 hormones: insulin and glucagon. 
- Insulin is released by the beta-cells of pancreas and acts like a key to glucose into our cells (thus reducing glucose presence in our blood) 
- Glucagon has the opposite effect and is released by the alpha-cells of the pancreas. In period of low glucose, such as fasting, it raises glucose by signaling the liver (which acts as a store) to release glucose.

Now, diabete can take two forms: type 1 and type 2.

Diabete type 1 is a disease in which the immune system mistakenly attacks the pancreas' beta cells which make insulin. Without enough insulin, glucose builds up in the body. Patients need insulin injections since their body can't produce it.

Diabete type 2 is a disease in which the pancreas still produces insulin but the body becomes resistant to it (cells ignore the insulin's role as a key). This insulin resistance is due to inflammation, fat buildup or stress signals inside the cells. This leads to high blood sugar, which leads to the pancreas continuously producing insulin and ultimately to the pancreas metabolic dysfunction.

How does GLP-1 work
GLP-1 stands for glucagon-like peptide-1 and is a gut hormone that boosts insulin's effectiveness again resistance. GLP-1 agonists (like Novo's semaglutide which we will review later) helps by slowing digestion, which prevents blood sugar spikes and reduces the demand for insulin. GLP-1 also cuts inflammation and eases cell stress, making cells more responsive to insulin. It also suppresses glucagon secretion from alpha cells, which curbs excess glucose in the blood. As you might have understood, the result is much lower stress on the pancreas and much better glucose regulation inside the body, which is a perfect outcome for diabete type 2 patients.

You might see now why GLP-1 drugs are not just a band-aid solution: by lowering the stress on the pancreas and improving the cells' resistance to insulin, these address the deeper causes of diabete type 2.
 
Another benefit is that doctors noticed that patients on these drugs lost weight. By slowing digestion, GLP-1 signals a feeling of fullness to the brain, which makes people want to eat less. Ironically, by helping patients loose weight, GLP-1 drugs solve for obesity: one major aggravating factor for diabete type 2!

The market opportunity for GLP-1 drugs
Over 1 billion people worldwide grapple with obesity, a number climbing due to poor diets and too little exercise. Obesity is also placing a heavy burden on already-stretched healthcare systems as it is the root cause of many chronic conditions (diabete, cardiovascular issues, sleep apnea, renal dysfunction), a strong incentive for them to tackle this issue. Currently, 2% of the 1bn people living with obesity are receive treatment. As a results, analysts estimate the obesity drug market by 2035 at 150 bnUSD (versus 10 bnUSD in 2023). A huge growth moving forward!

Regarding diabete, about 589 million adults are currently living with diabete, projected to grow at 850m by 2050. However, the diabete market is already more established, accounting for two-thirds of Novo sales in 2025. Growth will therefore remain significant but slower than for obesity (because it is starting from a higher base, and ultimately reaching less people worldwide).


Effectiveness and side effects of Novo Nordisk products versus Eli Lilly
Currently, the diabete and obesity market is a duopoly between Novo Nordisk and Eli Lilly. Let's deep dive on the effectiveness of their drugs with a focus on weight loss metrics, given obesity is the largest growth market.

For injectables, Novo sells Semaglutide under the brand name Wegovy while Eli sells Tirzepatide under the Zepbound brand.
The Surmount-5 study showed Semaglutide 2.4mg (injectable) results in a mean weight loss of 13.7%, versus 20.2% for Tirzepatide 15 mg after 72 weeks. The side effects are similar across both drugs. In short, for injectables, Tirzepatide has a much better effectiveness with similar side effects.

For the oral daily format, the Novo 25mg semaglutide tablet have the same effectiveness as the injection (13.6% weight loss under the Oasis 4 study). In addition, Novo is offering the 50mg semaglutide tablet which shows a 17.4% weight loss reduction after 68 weeks (Oasis 1 trial). In comparison, the Phase 3 Attain-1 trial reached 12.4% weight loss for Orforglipron (Eli Lilly's version for oral) after 72 weeks. Both Eli Lilly and Novo products have similar side effects. However, Orforglipron offers slightly better convenience (Novo's pill should be taken on an empty stomach and wait 30 minutes before eating, while Eli's product can be taken at any moment of the day).
In short, for oral, Semaglutide has a better effectiveness while being slightly less convenient. 

Pipeline of Novo Nordisk and Eli Lilly
The pipeline of Novo Nordisk through 2026 and 2027 is mainly focused on higher doses versions of existing drugs and new next-generation molecules, centered around semaglutide:


- Cagrisema 2.4mg shows 23% weight loss after 84 weeks (versus 25.5% for Eli Lilly Zepbound) as part of Redefine 4 trial. Novo plans to start a Phase 3 trial in the second half of 2026 with a higher dose of semaglutide (7.2mg)
- Wegovy high dose (7.2mg) : this is already approved in Europe, and management expects an FDA decision by end of Q1 2026, which has shown 21% weight loss
- Zenagamtide (formerly amycretin) is another next-generation GLP-1/amylin co-agonist that showed 24% weight loss in 36 weeks during Phase 2 trial. Novo is starting the Amaze phase 3 program in early 2026, with an expected launch before 2030
- Finally Novo has said that two triple agonist molecules are advanced through clinical trials with potential for higher weight loss, but didn't give details about dates / timelines

In comparison, Eli Lilly triple agonist (Retatrutide) is showing 24% weight loss in Phase 2 trial after 48 weeks, with a launch expected in 2027/2028

Based on this, Eli Lilly will most likely keep the lead on the effectiveness of injectables, especially given that Retatrutide is arriving in 2027/2028 and that Zenagamtide is not coming before 2030

Personal conviction
My personal conviction is that for slightly overweight people, they will prefer the convenience of the oral pill in daily format and Novo Nordisk has a clear lead there (especially with the 50mg format). These slightly overweight people (BMI between 25 and 30) account for 30-35% of adults in the US. For obese people (BMI above 30) for which loosing weight is a deep trauma, they will prefer maximizing weight loss using a weekly injectable and avoid the bariatric surgery. Here, Eli Lilly has an undisputed lead with Tirzepatide. These obese people account for 40-43% of adults in the US. 

Based on this, I would assume that Eli Lilly can capture about 60% of the obesity market in the next 3 years, versus 40% of the Novo Nordisk market (assuming similar pricing levels). I don't think a winner-take-all is realistic given the product considerations, especially if you include other considerations such as manufacturing capacity, commercial / distribution capabilities of these two giants.

Beyond the next 3 years, we need to start looking at the pipeline of the rest of pharma companies who aren't planning to sit tight and watch the duopoly race!

Where do other pharma companies stand in the race

This link from Polaris Capital shows why Novo Nordisk and Eli Lilly are effectively leading the obesity market race. Considering the drug development timelines, trial periods, regulatory approvals and launch phases, the competition is expected to slightly intensify in 2028 and greatly intensify around 2029/2030. Let's look at the effectiveness of the competing drugs based on latest trial results:


Overall, Roche's drug CT-388 seems the most promising candidate with 22.5% weight loss after 48 weeks, which should hit the market around 2029/2030. This will coincide with the launch date of Zenagamtide from Novo and Retatrutide from Eli Lilly which are slightly better, both standing at 24%.

Based on product considerations alone, and setting alone other variables (pricing strategy, manufacturing capacity, commercial excellence), I think that Novo is a serious contender to retain a solid share of the obesity drug market, probably in the 30-40% range for the longer-term

Teqnion: the ultra-serial-acquirer

Teqnion is an unusual company. You notice it almost immediately when reading their annual report: from funny faces of their founder-CEO to quirky comments from Daniel (Deputy CEO), that's markedly different from the polished annual reports I am used to read. Besides their funny look and feel, don't get mistaken: the executive team is incredibly focused on shareholder value. 

I've decided to start a long position for the following reasons:

- Incremental return on invested capital is trending upwards and now above 20% - Although they've made bad acquisitions in the past and admitted learning from these (from acquiring contract manufacturers with tight margins, being exposed to cyclical industries such as housing), management is refocusing its acquisition strategy towards "product" companies in niche industries with strong pricing power. The incremental return on capital is improving markedly as a result: from less than 5% in 2024, they've reached 25% in Q3 2025 and 21% in Q4 2025%. My definition of normalized operating profit excludes the goodwill impairment due to the legal dispute with Reward Catering in 2025 (as a non-cash expense). An interesting aspect will be to dissect the breakdown of this ROIIC between organic growth vs acquisitions - this will be for a later post!

- A enormous runway for growth, enabling a reinvestment rate above 100%: Europe has millions on industrial businesses which could be a potential fit for Teqnion. Although the serial acquirer model is well established in Sweden (home of Lifeco and other serial acquirers) with fewer quality acquisitions realistically available in Sweden, they've shifted gears to the UK with a new country structure that sets them up for growth (head of UK and head of Sweden). Teqnion's historical reinvestment rate was 117% in 2024 and 349% in 2025, while maintaining their Net Debt / Ebitda at 1.6x as of end of 2025 (below 2.5x target)

- A FCF yield at 6.4% as of end of 2025 (versus 4.2% median since 2019). The FCF yield is also higher than other serial acquirers such as Lifco and Heico at 2-3%. You're essentially getting a serial acquirer 2-3x cheaper than the more established serial acquirers, which reflects the increased "risk" that Teqnion is still a young company (but i believe has more upside!)


- Well-aligned management incentives: Johan owns about 5% of the stock (134mSEK at the time of writing) and Daniel owns 0.6% (17mSEK) so it makes incentives super aligned with individual shareholders. They repeatedly mention that their objective is to double the EPS every 5 years, with a strong long-term mindset.

- Their moat : a culture of humility, decentralization and grinding I believe the "moat" of this company is the unique culture and mindset of Johan and Daniel, that was cascaded across the organization. Daniel's analytical skills (in charge of acquisitions) complement Johan's people skills. Their communication style is transparent, humble and pragmatic. In podcasts/interviews, Johan and Daniel talk extensively about a culture of decentralization "Trust but verify" and their love for "grinding". Johan is an ultra-runner, see here for his achievements. His drive coupled with his low-ego are fairly unique to me.

I'll leave you with this quote from Johan Steene, Teqnion's founder and CEO which summarizes the unique culture at Teqnion:

I truly believe that we are special cause we love our team. We love to build great things, and we love to be at our best. The Teqnion management team only exists to do tough tasks, support the subsidiaries and make the group more robust and more profitable. Since we cost money, we need to put more value in through work. We try very hard to perform well for the group, not for ourselves.

I do not quite understand how it became like this, but I love it.

We know that true change comes from tens of thousands of small improvements, not by a few big strokes. Thousands of small nudges that turn into sustainable improvements and mastery. The culture is true to decentralization. We are much faster since we are always closer to where a decision should be made. We love the deals, and we cherish the people doing them.

Investing principles

Swan Fund is a family fund to protect and grow my family's wealth. I'm a regular person: 40 years old, with a full-time job, 2 kids. While I definitely have an interest for investing, I value other things more: spending quality time with my family, playing tennis with a friend, having a good laugh or watching a thriller with my wife.

Swan Fund is the fund that allows me to do all of these fun things, while Sleeping Well At Night, knowing that our savings are hard at work. If I can do this, you can probably do too and if this site can help you along the way, that would make me very happy.

After all these niceties, let's get right to it.

I invest for the long-term in high-quality businesses that have the potential to 10x. By nature of things, 10x is more likely to be found in small and mid-cap stocks. I am not aiming for a specific return every year and rather aim to double the portfolio every 5 years.

My approach is strong influenced by Terry Smith principles of buying good companies, don't overpay and do nothing. This means that I adopt a simple buy and hold approach and don't aim to second guess myself of when is the right timing to sell. The main difference with Terry Smith is that he invests much larger sums of money that I ever will, so he's looking in the highly competitive space of large caps. I am to replicate this approach while being agnostic to the business size: from small-caps to large-caps.

My holdings are diversified in 10-15 stocks for which I follow the fundamentals: reading and dissecting the financial statements, listening to the earnings calls, follow the competitors and market environment. Because of this diversified portfolio, a 50% drop in price in one stock means a 3-5% drop in my overall portfolio. This is something I can live with, and if I have extra cash to invest, I use the opportunity to reinvest in the stock at a lower price.

What is a high-quality business? It is a business that is generating high returns on incremental invested capital, has a clear runway for reinvesting all of these returns (instead of distributing dividends) and can be bought at a decent price.

The simple equation sums it up for me:

High ROIIC x High reinvestment rate x Decent FCF yield

More specifically, I look for the following attributes:

- An incremental return on invested capital (ROIIC) above 20% based on recent financial statement - The market is a second-order system, which is why I look for the incremental return and not for the average return on invested capital. A consistent incremental return of 20% is a great indication that the average return on invested capital will anyway converge towards 20% in the long-term. Sometimes these companies already start from a high average return of invested capital. Sometimes they start from very low average returns but are hitting an inflection point, which allows me to acquire them before they've gone too expensive.

- A reinvestment rate above 100% - I look for companies with a clear secular trend (e.g., change in demographics, change in consumption patterns) or that have a clear market opportunity to grow. This biases me towards compounders riding large trends or serial acquirers, a type of company which predominantly grow by acquisitions of smaller private businesses. 

- A FCF yield below the median historical FCF yield of the company (or its competitors). While the first two criteria (high ROIIC and high reinvestment rate) are non-negotiables, I see an attractive valuation as a nice to have. As Munger states, the long-term return on an investment will converge towards the return of the underlying business. A multiple expansion is a nice sweetener of returns but this shouldn't come at the expense of buying a lower quality company.

- A moat advantage - the moat is what will allow to high return on capital to be sustained over the long-term, despite the headwinds and market competitive pressures. Moats can take the form of network effects, high switching costs, high brand loyalty or unique access to a physical ressource. If the moat is not strong currently, I am looking clear signs of a widening moat over the last few years.

- Management with skin in the game and with clear incentives focused on long-term value creation (such as return on capital). I tend to stay away from companies that incentives short-term goals (such as revenue growth) or tend to have excessive stock-based compensation (which is a hidden cost to shareholders and should be factored in)

- A culture of high-integrity. This is much harder to assess but I look for companies that value hard work, simple and direct communication, and have fun along the way. Clues of this might be found in founder's podcasts, glassdoor rating reviews and other random website links.