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Novo Nordisk, Eli Lilly are tackling supply issues

simolhiba by simolhiba
February 10, 2024
Reading Time: 8 mins read
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Novo Nordisk, Eli Lilly are tackling supply issues

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Injection pens of Novo Nordisk’s weight-loss drug Wegovy are shown in this photo illustration in Oslo, Norway, Nov. 21, 2023.

Victoria Klesty | Reuters

The insatiable demand for weight loss drugs is trouncing supply, leaving many patients struggling to find the injectable treatments. 

The dominant weight loss drugmakers, Novo Nordisk and Eli Lilly, have said supply woes likely won’t go away anytime soon, as the popularity of those medicines continues to soar. But both companies are showing encouraging progress in their efforts to increase supply. 

“I think it’s going to take a few years for it to resolve itself,” Cantor Fitzgerald analyst Louise Chen told CNBC of the supply issues. “But I think both companies will slowly start to meet the demand in the market.” 

Patients have flocked to weight loss drugs such as Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound as the treatments help them shed significant pounds over time, despite the drugs’ hefty price tags, mixed insurance coverage and handful of unpleasant side effects.

Goldman Sachs analysts expect 15 million U.S. adults to be on obesity medications 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 spikes, most of the drugs have slipped into intermittent shortages. But there is limited data available on how significant shortages are or how much supply companies have.

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

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

Those efforts aim to reassure anxious investors that they can capitalize on the success of the treatments and to reassure patients that they can access the treatments. Novo Nordisk and Eli Lilly look to maintain their edge in the market as other companies such as Amgen, Pfizer, AstraZeneca, Roche and smaller obesity drugmakers race to join the space. 

Drugmakers kick off 2024 with supply progress 

Novo Nordisk last week said it had more than doubled its supply of lower-dose versions of its weight loss injection Wegovy in January compared with previous months, which will allow more people to start taking the drug. Shortages have forced Novo Nordisk to restrict the availability of those lower “starter” doses in the U.S. since May. 

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

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

An Eli Lilly and Company pharmaceutical manufacturing plant is pictured in Branchburg, New Jersey, March 5, 2021.

Mike Segar | Reuters

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 occurring in the second half of the year. 

By that point in the year, the company expects its production of sellable doses of incretin drugs to be at least 1.5 times higher than it was in the second half of 2023, executives said.

Catalent deal could boost Wegovy supply

Novo Nordisk and its parent company, Novo Holdings, unveiled multibillion-dollar deals that could increase Wegovy supply — just not yet.

Novo Holdings on Monday said it will acquire drug manufacturer Catalent in a $16.5 billion deal. Catalent is the main supplier of fill-finish work, which involves filling and packaging 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 that purchase will gradually increase the company’s manufacturing capacity starting in 2026. 

A general view of the drug product manufacturing laboratory in biologics and sterile injectables, Catalent, in Brussels, Belgium June 27, 2023. REUTERS/Yves Herman

Yves Herman | Reuters

In a note Tuesday, TD Cowen analyst Michael Nedelcovych wrote the Catalent deals will likely “boost production faster” than building entirely new plants or adding more production lines to existing sites, moves Novo Nordisk is still pursuing. Those efforts are more “expensive and time consuming” than the acquisition, he noted.

Eli Lilly CFO Anat Ashkenazi told investors during an earnings call Tuesday that the company has concerns about Novo Holdings’ acquisition, especially since Eli Lilly contracts Catalent to manufacture some of its medications. 

But Eli Lilly has said it doesn’t have meaningful production coming from Catalent, so the acquisition may have little effect on its business, Cantor Fitzgerald’s Chen said.

New plants could increase long-term supply 

Novo Nordisk and Eli Lilly have both poured billions into building new production sites that could boost 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 start production of incretin drugs as early as the end of the year, with products available to ship in 2025. 

In a note Sunday, Morgan Stanley analysts said they expect that facility and one in North Carolina’s Triangle Park, which started production last year, to help the company significantly increase its capacity for supplying autoinjector forms of Mounjaro, Zepbound and Eli Lilly’s other diabetes drug Trulicity. Autoinjectors are the traditional delivery devices of those medicines.

The company also will build a handful of other facilities over the next few years. Eli Lilly in November said it would spend $2.5 billion to open a manufacturing site for injectable products in Germany, with construction beginning this year.

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

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

Other forms of weight loss drugs could help 

Alternative forms of weight loss drugs could also help alleviate supply constraints in the future.

Eli Lilly has limited capacity to make autoinjectors for Mounjaro and Zepbound. So, the company plans to launch Mounjaro in a delivery device called KwikPen in certain countries outside of the U.S. The method requires additional regulatory approvals. The UK recently approved Mounjaro in KwikPen form. 

The drugmaker has said launching KwikPen forms of its incretin drugs will expand supply. That’s because Eli Lilly for years has used that device for insulin, so the company can tap into existing manufacturing resources to make more of other incretin drugs. 

KwikPen is a single four-dose pen that covers a month’s treatment. Patients using autoinjectors go through four different pens per month.

Wells Fargo analyst Mohit Bansal wrote in a note last month that if Eli Lilly launches its diabetes and weight loss drugs in KwikPen form in the U.S., it could be a “source of supply upside” in the market for 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 edge 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 midstage trial. The result appeared to be consistent with the weight reduction caused by Novo Nordisk’s oral drug, but over a shorter trial period. 

Still, Eli Lilly may release late-stage trial data on the pill in 2025, so it won’t be entering the market any time soon. 

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