Wegovy Sales Drop Due to Lower Prices, Limited Supply

Novo Nordisk, a leading pharmaceutical company, has reported a slowdown in sales of its obesity drug, Wegovy, over the first three months of 2024 compared to the previous quarter. Contributing factors include reduced prices and ongoing supply limitations. Despite these challenges, the company still achieved $1.3 billion in first-quarter sales for Wegovy, doubling the amount from the same period in 2023. To address supply issues, Novo began gradually increasing the number of starter doses for Wegovy starting in January.

Wegovy faces competition from Eli Lilly's newly approved obesity drug, Zepbound, which garnered $517 million in sales during its first quarter. According to analytics firm Iqvia, Zepbound has seen slightly more new prescriptions than Wegovy, although Wegovy retains a larger market share.

In response to the competition and market conditions, Novo is adapting its sales strategy. The company is focusing on securing better insurance coverage in the U.S. and, as a result, is accepting a lower net price for Wegovy. Net prices are the cost of a drug after accounting for rebates and discounts. Although this led to a slight decline in sales, it opened up a larger market opportunity. Wegovy is now accessible to 50 million obese individuals in the U.S. through various insurance programs, including Medicaid in 15 states and some Medicare plans.

In March, the Food and Drug Administration (FDA) approved Wegovy for reducing cardiovascular risks in obese individuals with heart disease, allowing limited Medicare reimbursement. While Medicare cannot cover weight-loss drugs solely for weight loss, it can fund medications that protect heart health. Novo's CEO, Lars Fruergaard Jørgensen, emphasized the company's commitment to treating more patients, even if it means accepting slightly lower prices.

Both Novo and Lilly are grappling with manufacturing constraints, as producing complex biologics like Wegovy and Zepbound is challenging. To manage this, Novo limited access to Wegovy’s starter doses last year to maintain a steady supply for existing patients. Recently, Novo expanded its production capacity by acquiring three manufacturing plants through a deal involving its parent company, Novo Holdings, and Catalent, a manufacturing partner.

Similarly, Eli Lilly is under pressure to meet the demand for Zepbound. The company has launched an ambitious expansion plan, which CEO David Ricks described as the most extensive in Lilly's history. This initiative aims to significantly increase the production of Zepbound and the diabetes medication Mounjaro by the latter half of 2024.

In summary, Novo Nordisk's strategic adaptations and efforts to enhance manufacturing capabilities are crucial as it competes with Eli Lilly in the obesity drug market. Both companies are making significant strides to meet growing demand and improve accessibility to their respective medications, despite facing considerable production challenges.