Danish pharma giant Novo Nordisk on Friday announced plans to spend $6 billion to boost manufacturing capacity, amid booming demand for its wildly popular weight loss and diabetes drugs Ozempic and Wegovy and as new competitors reach the market.
Novo Nordisk said it will invest in boosting production capacity in Kalundborg, Denmark, within its chronic diseases portfolio.
The vast majority of the funds will go towards building Novo’s capacity to manufacture active pharmaceutical ingredients—the chemical components in drugs or treatments that produce the desired effect on the body—but will also boost other parts of its supply chain, such as packaging.
Novo said the investment includes ramping up capacity for its GLP-1 products, which includes its best selling diabetes treatment Ozempic and weight loss blockbuster Wegovy.
There are worldwide shortages of both treatments, which contain a compound called semaglutide that mimics the action of the GLP-1 hormone responsible for regulating appetite and blood sugar, and Novo CEO Lars Fruergaard Jorgensen has previously said it will take “years” for the company to fully satisfy demand for the drugs.
In an interview with Reuters on Friday, Jorgensen said the industry as a whole is a long way from meeting the potential demand for anti obesity drugs like Wegovy, adding that Novo and its competitors will have to “continuously” invest in building capacity.
Considering what Novo and rival companies are building, Jorgensen said the sector is “far from getting to a billion people,” referring to the number of adults the World Health Organization estimates will be obese by 2030.
The Food and Drug Administration authorized Eli Lilly’s Zepbound for weight loss on Wednesday. The drug, a weekly injectable, contains tirzepatide, the same ingredient in the company’s diabetes medication Mounjaro. It functions in a similar way to Novo’s semaglutide by mimicking the function of GLP-1. Zepbound has also been approved for weight loss by regulators in the U.K., though whether it is used widely will depend on the outcome of a cost assessment from the country’s National Health Service. The drug is widely expected to become a bestseller and research suggests it could trounce its rivals when it comes to helping users shift weight.
For several years, Novo’s Wegovy had been the only drug of its kind on the market authorized explicitly for weight loss in the U.S. Other drugs, including Ozempic and Mounjaro, are authorized for other conditions but frequently used off-label for weight loss as well. Studies show the treatment, taken via injector pen, can help facilitate weight loss. Obesity is a major and growing public health crisis and linked to a higher risk of numerous other conditions including stroke, heart attack, high blood pressure, cancer and mental health conditions like depression and public health funders like Britain’s National Health Service have shown a willingness to fund the weight loss treatment for its health benefits. The pool of eligible people could expand, as research suggests the treatment could help with other issues like heart failure and kidney disease. Wegovy’s popularity has helped catapult Novo to become Europe’s most valuable private company and resulted in shortages and supply restrictions. These constraints have delayed Novo from launching the product in markets outside of the U.S. The market is shaping up to be one of the most profitable opportunities for the pharmaceutical sector in history and analysts estimate it could be worth as much as $100 billion by the end of the decade and potentially much more.
What To Watch For
Novo and Lilly are trailblazers in the nascent weight loss drug market and are expected to stay in the lead for the near future. Commenting on the approval of Lilly’s Zepbound, Novo’s Jorgensen said the arrival of a competitor for Wegovy “will further fuel market growth.” The two companies are far from alone in trying to cash in on the booming opportunity and other pharma giants like Pfizer are racing to develop rivals and secure a slice of the market. Other companies, like foods giant Nestlé, have expressed concern over the potential for weight loss drugs to eat into their sales and are developing companion products targeted towards people using the drugs.
Novo Nordisk invests $6 bln in Wegovy production, still far below demand -CEO (Reuters)
Wegovy rival Zepbound wins approval amid weight-loss jab gold rush (Telegraph)
Weight-Loss Drug Wegovy Will Launch In More Countries Despite Ongoing Struggles Over Stellar Demand, CEO Says (Forbes)
Counterfeit Ozempic, Wegovy, Mounjaro Pens Reported To FDA: How To Spot A Fake (Forbes)