It wasn’t calls from lawmakers but market competition with Eli Lilly’s Zepbound that prompted Novo Nordisk to lower the prices of its blockbuster weight-loss drug.
We all know about the high costs of GLP-1 drugs like Novo Nordisk’s Wegovy. Sen. Bernie Sanders (I-Vt.), chair of the Senate health committee, last month launched an investigation into what he called the “outrageously high prices” of Novo’s top-selling GLP-1 analog semaglutide, which is sold as Ozempic for type 2 diabetes and Wegovy for weight loss. He warned that if the prices for the blockbuster drugs are not substantially reduced they “have the potential to bankrupt Medicare, Medicaid, and our entire healthcare system.”
While Sanders’ plea does not seem to have had an impact, Novo did reveal in its first-quarter 2024 financial results reported yesterday that it was forced to cut prices of Wegovy—due to growing competition from rival Eli Lilly.
In November 2023, the GLP-1 competition between Novo and Lilly officially became a two-horse race as Lilly’s Zepbound was approved by the FDA for weight loss. Novo’s Q1 2024 earnings reported on Thursday were the first full quarter of results since Lilly launched Zepbound in the U.S. and an indication of things to come.
Novo CFO Karsten Munk Knudsen told analysts on Thursday’s call that “given increasing volume and competition, net pricing like-for-like will be down in the U.S.,” adding that the downward trend for Wegovy is expected to continue through the rest of the year. Knudsen in an interview yesterday with Bloomberg touted the fact that currently more than 25,000 people in the U.S. begin Wegovy each week—five times the number from the start of 2024—while insisting that Novo’s plans are “on track.” He said the Danish drugmaker was not surprised by the price pressure in Q1.
“I wouldn’t say that price pressure is more intense than what we expected,” Knudsen said. “We’ve actually been out for quite a while saying that as the market matures and volumes ramp up and competition enters the market, then it’s natural that prices would be coming down—and that’s what we’ve seen in the first quarter and also what we expect for the full year.”
Knudsen emphasized that Novo is not pursuing “price maximization” but is instead focusing on a volume strategy intended to “build a market which has very sizable potential,” noting that the company currently is only serving a little more than 1 million people with obesity out of a global obese population of 800 million.
Despite Knudsen’s window dressing, Wegovy Q1 sales came in weaker than analysts expected. While sales of the weight-loss drug skyrocketed 106% in the quarter, bringing in $1.35 billion, it was below analyst expectations of $1.5 billion.
Meanwhile, Lilly on Tuesday reported Q1 2024 financial results, which was Zepbound’s first full quarter on the U.S. market since winning FDA approval in November. Zepbound generated sales in the quarter of $517.4 million, beating analysts’ expectations of $373 million, with Lilly raising its full-year revenue guidance by $2 billion to the range of $42.4 billion to $43.6 billion.
A change in market dynamics appears to be taking shape with Lilly’s Zepbound overtaking Novo’s Wegovy in new U.S. prescriptions for the first time in early March, according to Reuters. The writing is on the wall for Novo in the GLP-1 market which could exceed $100 billion by 2030, with Zepbound poised to steal market share from Wegovy. While Wegovy was approved by the FDA in June 2021, giving Novo a more than two-year lead in the weight-loss space over its rival, analysts are predicting that Lilly will ultimately become the market leader and Zepbound will potentially take the title of the biggest drug of all time. It’s only a matter of time.
Greg Slabodkin is the news editor at BioSpace. You can reach him at greg.slabodkin@biospace.com. Follow him on LinkedIn.
