Novo Nordisk Lowers Wegovy Price Amid Eli Lilly Competition

The high costs of GLP-1 drugs, particularly Novo Nordisk’s Wegovy, have become a major topic of concern. Senator Bernie Sanders (I-Vt.), who chairs the Senate health committee, initiated an investigation last month into the "outrageously high prices" of Novo’s GLP-1 analog semaglutide, marketed as Ozempic for type 2 diabetes and as Wegovy for weight loss. Sanders warned that unless prices for these blockbuster drugs are significantly reduced, they might "bankrupt Medicare, Medicaid, and our entire healthcare system."

Despite Sanders' concerns, Novo revealed in its first-quarter 2024 financial results that it had to reduce the prices of Wegovy due to escalating competition from rival Eli Lilly. The competition formally intensified in November 2023 when the FDA approved Lilly’s Zepbound for weight loss, marking the beginning of a two-horse race in the GLP-1 market. The Q1 2024 earnings report was the first full quarter after Zepbound's U.S. launch and offered a glimpse into the evolving market dynamics.

During a conference call with analysts, Novo CFO Karsten Munk Knudsen acknowledged that "given increasing volume and competition, net pricing like-for-like will be down in the U.S.," and this downward trend is expected to persist throughout the year. In an interview with Bloomberg, Knudsen highlighted that over 25,000 people in the U.S. now start Wegovy each week—five times the number at the beginning of 2024—while maintaining that Novo's plans remain "on track." He noted that the price pressure experienced in Q1 was anticipated.

"I wouldn’t say that price pressure is more intense than what we expected," Knudsen remarked. "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 underscored that Novo's strategy isn't about "price maximization" but rather about focusing on volume to "build a market which has very sizable potential." He noted that the company currently serves a little over 1 million people with obesity out of a global obese population of 800 million.

Despite Knudsen’s positive spin, Wegovy Q1 sales were weaker than analysts had anticipated. The sales of the weight-loss drug surged 106% in the quarter, generating $1.35 billion, still falling short of analysts' $1.5 billion expectations.

Meanwhile, Eli Lilly reported its Q1 2024 financial results on Tuesday, marking Zepbound’s first full quarter on the U.S. market since its FDA approval in November. Zepbound generated $517.4 million in sales, exceeding analysts' expectations of $373 million, and Lilly subsequently raised its full-year revenue guidance by $2 billion to a range of $42.4 billion to $43.6 billion.

According to Reuters, a shift in the market dynamics appears to be underway with Lilly’s Zepbound surpassing Novo’s Wegovy in new U.S. prescriptions for the first time in early March. This development signals a changing landscape in the GLP-1 market, which could potentially exceed $100 billion by 2030. Analysts predict that Lilly will eventually become the market leader, with Zepbound poised to capture significant market share from Wegovy. Although Wegovy was approved by the FDA in June 2021, giving Novo more than a two-year lead in the weight-loss sector, Zepbound is anticipated to become the biggest drug of all time. It seems only a matter of time before this prediction is realized.

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