Novo Nordisk (NVO) is facing increasing pressure from its main competitor, Eli Lilly (LLY), as the rivalry in the weight-loss drug market intensifies. Despite holding 72% of the global market share for its GLP-1 drug Wegovy, the company has seen its stock fall by more than 22% this year. Recently, Lilly’s Zepbound surpassed Wegovy as the leading obesity drug in the U.S., according to new prescription data.
Although Novo remains Europe’s most valuable company, its stock price has been negatively impacted by competition in the U.S. Novo’s CEO, Lars Jørgensen, attributes some of the sales decline to copycat versions of Wegovy from compounding pharmacies. These drugs became more available following a shortage of semaglutide in the past couple of years, which limited supply.
In an interview with Yahoo Finance on Wednesday, Jørgensen noted that the compounding market has become “approximately as big as our own business.” Novo reported combined sales of Wegovy and Ozempic exceeding $7.5 billion. However, no public data is available on the revenue generated by compounding pharmacies. Still, a 2024 estimate from the Outsourcing Facilities Association, which represents these pharmacies, showed 80 million prescriptions for semaglutide alternatives were filled last year.
This surge in compounding prescriptions was one of the reasons Novo missed its first-quarter sales estimates for Wegovy by 7%.
Looking ahead, Jørgensen pointed to some positive developments. The U.S. Food and Drug Administration (FDA) recently removed semaglutide from its shortage list, which could ease supply issues in the second half of the year. However, Novo has still lowered its sales guidance by 3%.
In an effort to boost access to Wegovy, Novo has also formed partnerships with telehealth platforms like Hims & Hers (HIMS). Furthermore, the company secured an exclusive deal with CVS (CVS), making Wegovy the preferred weight-loss drug on the pharmacy chain’s formulary. This deal caused a significant drop in Lilly’s stock last week, but Jørgensen emphasized that CVS had approached Novo for the agreement, not the other way around.
“We have not made a bid for an exclusive position,” Jørgensen clarified.
Some investors have expressed concerns that this deal could spark a price war, but Jørgensen reassured that the company was not aiming to lower prices. He stressed that Novo believes in providing choices for both physicians and patients.
Whether the new partnerships will increase Wegovy prescriptions remains uncertain. Investors are watching closely to see if these strategies make a significant impact.
In addition to expanding access, Novo is also working on a pill version of Wegovy. The company hopes to be first to market with this form, which is currently under FDA review. Jørgensen is optimistic, noting that the FDA approval process should go smoothly, especially since Novo already has a semaglutide pill, Rybelsus, on the market.
“From a risk and FDA point of view, I think this is one of the easier reviews,” he said.
As competition between Novo Nordisk and Eli Lilly heats up, all eyes are on the coming months to see how these developments will shape the weight-loss drug market.
