Novo said supply of Wegovy and Ozempic is in good shape after the drugs were removed from the FDA’s shortage list last week. But Eli Lilly reported slower than expected sales in the third quarter due to wholesaler destocking.
Eli Lilly blamed wholesaler destocking of its much-hyped GLP-1 medications for a drop in third-quarter earnings last week. When fierce competitor Novo Nordisk reported earnings yesterday, there was no mention of the same issue.
Novo declined to speak to the wholesaler issue when contacted by BioSpace but did say supply operations are going well after its GLP-1 medicine semaglutide, marketed as Wegovy for weight loss and Ozempic for diabetes, was removed from the FDA’s shortage list last week. Novo told reporters last week that all doses of Ozempic and Wegovy were being shipped to wholesalers, pointing to investments in capacity and ongoing communication with the FDA for getting the medication restocked.
“What we can say on the matter is that we’re happy to be at ‘available’ and we are in continuous dialogue with the FDA as it relates to supply for all of our GLP-1 [receptor agonists] medicines,” a spokesperson for Novo said in an email.
But the company warned that while supply is flowing, patients may still have difficulty getting their prescriptions filled at a particular pharmacy. “Our intentional approach to gradually increase supply into the U.S. market is working,” the statement said. “We will continue to prioritize continuity of care for patients, closely monitoring market dynamics and prescribing trends along the way.”
A lumpy supply
Last week, Lilly CEO David Ricks attributed disappointing sales for tirzepatide, marketed as Mounjaro for diabetes and Zepbound for weight loss, to “inventory decreases in the wholesaler channel.” While stockpiles of the drugs had been built up in previous quarters, wholesalers have now apparently destocked them.
“There is a lot of lumpiness in channel stocking,” the CEO told investors.
Lilly CFO Lucas Montarce said on the earnings call that there were channel inventory decreases in the third quarter “as wholesalers continue to navigate the complexities of high-volume cold chain products across a dozen different dose and brand combinations.” He said this issue impacted sales of the drugs by “mid-single digits” as a percentage of aggregate sales.
Lilly doesn’t control wholesaler stocks, as those businesses make their own decisions about which doses to have on hand, Ricks explained. Wholesalers also have to contend with physical constraints on what they can stock and cold chain storage capacity constraints.
Still, Lilly booked a 25% volume growth in prescriptions for Mounjaro and Zepbound, with new product revenue topping $3 billion thanks to the drugs. Ricks reported that all doses are available for order from Lilly in the wholesale channel and through its direct pharmacy solution option, the self-pay LillyDirect service. In announcing second quarter earnings in July, Lilly added single-dose vials of Zepbound in the U.S. to the self-pay service, a move that Ricks said successfully expanded supply.
Like Novo, Lilly has prioritized patient continuity over new patient starts, meaning new uptake is delayed if supply is volatile. Lilly has had to be careful about engaging in “demand-stimulating activities” for the drugs to ensure interested patients can access them if they want.
“Is there a supply problem? No. Although if we had unlimited demand, there would be,” Ricks said. “We feel good about where we are. Obviously, there was some choppiness this quarter, but I think underlying growth here is as strong as we would have hoped.”
The FDA previously listed Mounjaro and Zepbound as in shortage, but removed them at the beginning of October, only to rethink the decision. Lilly is still waiting to hear whether the drugs will be returned to the list. That would allow off-brand compounding of the drugs to ease the shortage. Ricks has been outspoken on recent earnings calls that these compounded drugs are not a safe alternative.
Ricks said on the recent earnings call that the company is boosting capacity as fast as possible, but he pointed to regulatory hurdles as potentially slowing that process.
“It’s difficult to think about a world where the workaround to that is to unleash unregulated product,” Ricks said. “The workaround should be to collaborate with the companies to speed up legitimate product delivery, and we would embrace that discussion fully.”
The only way to truly solve the manufacturing woes, according to Ricks, is with an oral small molecule. Many rival companies are working on just that, but Lilly’s orforglipron is the furthest along in the pipeline. Even so, it’s still a long way out from being before regulators. If the data are strong, Ricks predicts Lilly could take orforglipron to the FDA in about two years.
For now, Lilly and Novo will have to face down wholesalers, compounders and the FDA to ensure a smooth supply of their medicines.
