Novo Nordisk and Eli Lilly address supply issues

Insatiable demand for weight loss medications is outstripping supply, leaving many patients struggling to find injectable treatments.

The leading manufacturers of weight loss drugs, Nordisk and Eli Lilly, have said supply problems likely won't go away anytime soon, as the popularity of those drugs continues to rise. But both companies are showing encouraging progress in their efforts to increase supply.

“I think it's going to take a few years to figure it out on its own,” Cantor Fitzgerald analyst Louise Chen told CNBC of the supply issues. “But I think both companies will slowly begin to meet market demand.”

Patients have flocked to weight-loss drugs like Novo Nordisk's Wegovy and Eli Lilly's Zepbound, as the treatments help them lose weight over time, despite high drug prices, insurance coverage mixed and a handful of unpleasant side effects.

Analysts at Goldman Sachs expect 15 million American adults to take obesity drugs by 2030. Some Wall Street analysts project that the weight-loss drug market could be worth $100 billion by the end of the decade.

As demand increases, most medications have experienced intermittent shortages. But there is limited data available on how significant the shortage is or how much supply companies have.

“I hear all the time about patients going to pharmacies that simply don't have them in stock, especially since the summer,” said Dr. Jeff Friedman, director of bariatric surgery at the University of Florida, who also prescribes obesity medications. . medicines.

But both Novo Nordisk and Eli Lilly gave investors updates on positive supply developments over the past week. They rounded out 2023 with a handful of new investments to expand production capacity for their weight loss and diabetes drugs.

Those efforts are aimed at reassuring anxious investors that they can capitalize on the treatments' success and reassuring patients that they can access the treatments. Novo Nordisk and Eli Lilly seek to maintain their advantage in the market while other companies such as amgen, Pfizer, AstraZeneca, Roche and smaller anti-obesity drug makers are rushing to join the space.

Novo Nordisk said last week it had more than doubled its supply of lower-dose versions of its Wegovy weight-loss shot in January compared to previous months, which will allow more people to start taking the drug. The shortage has forced Novo Nordisk to restrict the availability of those lower “initial” doses in the United States since May.

There is still “limited availability” of Wegovy doses of 0.25, 0.5, 1 and 1.7 milligrams, according to a Monday update to the Food and Drug Administration's drug shortage database. Patients typically start with the 0.25 milligram dose and increase the size over time to mitigate side effects such as nausea.

Novo Nordisk plans to gradually increase supply of Wegovy over the rest of the year, executives said on the company's fourth-quarter earnings call last week.

Certain doses of Eli Lilly's diabetes drug Mounjaro, which uses the same active ingredient as Zepbound, also have limited availability, according to the FDA. Both treatments are incretin drugs, which mimic gut hormones to suppress appetite and regulate blood sugar.

Still, Eli Lilly achieved its goal of doubling production capacity for such incretin drugs by the end of 2023, executives said during the company's fourth-quarter earnings call Tuesday. They said the company will expand production with “equal urgency” this year, with the most significant production increases coming in the second half of the year.

By that time of year, the company expects its production of salable doses of anti-incretin drugs to be at least 1.5 times higher than in the second half of 2023, executives said.

Novo Nordisk and its parent company, Novo Holdings, unveiled multimillion-dollar deals that could increase Wegovy's supply, but not yet.

Novo Holdings said Monday it will acquire the drugmaker Catalent in a $16.5 billion deal. Catalent is the leading provider of fill and finish work, which involves the filling and packaging of syringes and injection pens, for Wegovy.

Novo Nordisk will then buy three of Catalent's manufacturing sites from Novo Holdings for $11 billion. Novo Nordisk said the purchase will gradually increase the company's manufacturing capacity starting in 2026.

In a note on Tuesday, TD Cowen analyst Michael Nedelcovych wrote that the Catalent deals will likely “boost production faster” than building entirely new plants or adding more production lines to existing sites, moves Novo Nordisk has yet to make. is chasing. Those efforts are more “costly and time-consuming” than procurement, he said.

Eli Lilly Chief Financial Officer Anat Ashkenazi told investors during an earnings call Tuesday that the company has concerns about the Novo Holdings acquisition, especially since Eli Lilly contracts with Catalent to make some of its drugs.

But Eli Lilly has said it does not have significant production coming from Catalent, so the acquisition may have little effect on its business, Cantor Fitzgerald's Chen said.

Novo Nordisk and Eli Lilly have invested billions in building new production sites that could increase the supply of their weight loss and diabetes drugs in the coming years.

On Tuesday, Eli Lilly said a new plant in Concord, North Carolina, will begin production of anti-incretin drugs by the end of the year, with products available for shipment in 2025.

In a note Sunday, Morgan Stanley analysts said they expect that facility and another in North Carolina's Triangle Park, which began production last year, to help the company significantly increase its capacity to supply self-injecting forms of Trulicity. , another diabetes drug from Mounjaro, Zepbound and Eli Lilly. . Autoinjectors are the traditional delivery devices for these medications.

The company will also build a few other facilities in the coming years. Eli Lilly said in November it would spend $2.5 billion to open an injectable manufacturing plant in Germany, with construction to begin this year.

The pharmaceutical company has also invested more than $3 billion to build two new manufacturing facilities in its home state of Indiana.

Meanwhile, Novo Nordisk said in November it would invest $6 billion to expand its manufacturing sites in Denmark, noting it will finish construction from the end of 2025 to 2029. The company also said it would spend about $2.3 billion of dollars to build another production facility in Denmark. France.

Alternative forms of weight loss medications could also help alleviate supply limitations in the future.

Eli Lilly has limited capacity to manufacture autoinjectors for Mounjaro and Zepbound. Therefore, the company plans to launch Mounjaro in a delivery device called KwikPen in certain countries outside the US. The method requires additional regulatory approvals. The United Kingdom recently approved Mounjaro in the form of a KwikPen.

The drugmaker has said the launch of KwikPen forms of its anti-incretin drugs will expand supply. That's because Eli Lilly has used that device for insulin for years, so the company can leverage existing manufacturing resources to produce more anti-incretin drugs.

KwikPen is a single four-dose pen that covers one month of treatment. Patients who use autoinjectors go through four different pens a month.

Wells Fargo analyst Mohit Bansal wrote in a note last month that if Eli Lilly launches its diabetes and weight loss drugs in the form of the KwikPen in the US, it could be a “source of increased supply” on the market by 2025.

But both Eli Lilly and analysts have said that oral forms of weight loss and diabetes drugs, which are typically easier and cheaper to manufacture, will be key to meeting demand.

Eli Lilly is developing an oral drug called orforglipron, which may have an advantage over experimental weight-loss pills from Novo Nordisk and Pfizer.

Eli Lilly's pill helped overweight or obese patients lose up to 14.7% of their body weight after 36 weeks in a mid-stage trial. The result appeared to be consistent with the weight loss caused by Novo Nordisk's oral drug, but over a shorter trial period.

Still, Eli Lilly may release data from late-stage testing of the pill in 2025, so it won't be entering the market anytime soon.