The US Food and Drug Administration has approved Eli LillyThe GLP-1 pill, the company said, is a major milestone for the Indianapolis-based drugmaker and will test the market for new weight-loss drugs.
Lilly said the once-daily pill, Foundayo, will begin shipping from direct-to-consumer platform LillyDirect on Monday and will be available in pharmacies and telehealth platforms “shortly thereafter.” People with insurance coverage could pay $25 a month with a Lilly coupon, while people paying out of pocket could pay between $149 and $349, depending on the dosage.
The approval comes just months after Lilly submitted the drug to the FDA as part of a program that grants expedited reviews for drugs deemed to be of national priority interest. That means Lilly will introduce Foundayo just about three months after Novo Nordisk's Wegovy pill, setting the stage for the next battle between rival drugmakers on the next frontier of GLP-1 drugs.
“It's a great moment,” Eli Lilly CEO Dave Ricks said in an interview with CNBC. “We've obviously been working on this category of drugs for a while with the first GLP-1 drug 20 years ago and we've gotten better since then. Here's an option that's not more effective… but it's more accessible, it's easier to fit into your daily routine.”
Lilly licensed the molecule, orforglipron, from Japanese drugmaker Chugai in 2018, paying just $50 million upfront for global rights to the drug. But there are still doubts about the size the drug will reach. It doesn't produce as much weight loss as Zepbound, Lilly's best-selling drink. Millions of people are already accustomed to the routine of injecting themselves once a week.
Eli Lilly Foundayo GLP-1 diet pill.
Courtesy: Eli Lilly
Analysts estimate Foundayo's sales will reach $14.79 billion in 2030, according to FactSet. That compares with expectations of $24.68 billion for weight-loss drug Zepbound and $44.87 billion for Mounjaro, which is marketed for diabetes in the United States and for obesity and diabetes in the rest of the world.
Ricks said the shots haven't been as big a barrier to acceptance as Lilly once thought they would be. He still sees Foundayo as an attractive option for people who prefer to take a pill or are looking for a lower price than injectables.
He sees it as playing a role in maintenance, for people who reach their goal weight with one injection and want to maintain the weight. And he sees Foundayo as a way to “reach the planet” without the manufacturing limitations or cold chain requirements that come with Zepbound.
Foundayo is a small molecule, while Zepbound and Wegovy are peptides, which require more intensive manufacturing processes, a barrier Ricks believes will hamper generic versions of Wegovy that have recently been launched in other countries, including India.
“[Foundayo] allows for scalability, and that will allow us to launch this globally in the first instance,” Ricks said. “So today, you can get the oral version [Wegovy] in the US, but you can't really get it anywhere else. This will be marketed worldwide. “As soon as we have regulatory approvals, we will essentially have all the scale we need to supply the world with an oral GLP-1 inhibitor.”
Lilly expects approval of Foundayo in more than 40 countries over the next year. Since 2020, the company has invested more than $55 billion in manufacturing, including opening new sites and expanding existing plants to produce the pill.
In the United States, Lilly will compete with Novo's newly launched Wegovy pill. Initial demand for that pill has been higher than expected: Novo reported more than 600,000 prescriptions in March.
Novo CEO Mike Doustdar told CNBC in February that one of the early takeaways from the launch is that the pill appears to be expanding the obesity treatment market, attracting new patients rather than converting existing ones to injections. Ricks agreed with that assessment, saying that Lilly doesn't care whether people take Foundayo or Zepbound.
“We want people to take the medication that meets their health goals,” Ricks said. “If you have Lilly in the box, that's the goal we have.”
Novo plans to argue that the Wegovy pill is more effective than Foundayo. The Wegovy pill showed weight loss of about 16.6% on average in a late-stage trial, while Lilly's oral drug caused about 12.4% on average in a separate study, when patients who continued treatment were analyzed. Lilly's Zepbound has consistently shown that it can help people lose more than 20% of their body weight.
Meanwhile, Lilly plans to promote the fact that Foundayo can be taken at any time without restrictions, while the Wegovy pill should be taken first thing in the morning on an empty stomach and just a few ounces of water.
When the two medications are the same it is the initial price. The lowest doses of both drugs will cost $149 for cash-paying customers thanks to a deal the companies signed with the Trump administration last fall. And price is the most important factor for patients, said Dr. Nidhi Kansal, an obesity physician at Northwestern Medicine.
“Unfortunately, price is what drives decision-making between doctors and patients about these drugs because they are all great drugs and we have many options now, but at the end of the day it is still a financial decision,” Kansal said.
The lower price and accessibility of a pill versus a shot opens the market to casually interested patients, said BMO Capital Markets analyst Evan David Seigerman. Seniors with Medicare will be able to access Foundayo and other GLP-1 obesity drugs for $50 a month starting this summer as part of Lilly and Novo's deals with the Trump administration. Ricks expects a “pretty strong” response to the program, which Lilly incorporated into its financial guidance for the year.
Analysts say a successful Foundayo launch is key to Lilly's stock recovering from recent weakness. The company's shares have fallen about 14% this year after a meteoric rise that briefly made Lilly the first healthcare company with a trillion-dollar market capitalization. Sales are a lagging indicator, so analysts will follow prescriptions to monitor acceptance of the pill, said Carter Gould, an analyst at Cantor Fitzgerald.
“If the scripts are going in the right direction and you see continued progress, I guess people will overcome whatever kind of turmoil there is around. [the first or second quarter]”Gould said.
Another factor for Lilly's performance this year is the upcoming reading of its most potent obesity vaccine, retatrutide. The company has already shared some late-stage data on that drug, but the most important trial is one studying the treatment specifically for weight loss. If retatrutide lives up to its hype, Lilly would be on its way to creating a portfolio of obesity drugs.
“The future will have more options, and that's a great thing,” Ricks said. “And we hope that Lilly will be the one to present those options.”
