The Catch-Up Game Begins in Obesity and Diabetes Medicines

Two weeks ago, a shift started in the public messaging about semaglutide supply issues that have dogged Novo Nordisk from the very beginning of launching a version of this drug (Wegovy) for obesity. Has the catch-up game in production capacity for obesity and diabetes medicines begun at last in earnest?

At the beginning of November, the tone was almost complacent when the company announced that they were making gobs of money and didn’t see the possibility of a rapid “ramp-up” in supply. But then, just a week later, the reality of a competitor nipping at their heels hit when Lilly won approval for tirzepatide in obesity.

So now, we hear nothing but stories of Novo spending billions upon billions of dollars to expand their production of these peptides for injection all over the world. Perhaps it dawned on Novo that the Lilly message about “all hands on deck” to ensure an adequate supply resonated inside Novo.

Six Billion Here, Two Billion There

Whatever the reason, we started hearing multi-billion dollar investments in production capacity from Novo. On Thursday, they announced a $2.3 billion investment in France. Two weeks ago, the announcement was for a six billion dollar investment in Denmark. The money is flowing to ramp up production.

Of course, Lilly is spending on production, too. A week ago, they announced a $2.5 billion investment in production capacity at a new site in Germany. This comes on top of half a billion in North Carolina and $1.6 billion in Indiana. These investments are just a start, says Lilly CEO David Ricks:

“We’re not done with those. We think that there is a need to take up parenteral incretin supply pretty dramatically from the current levels. And we plan to do that.”

Launching While Rationing

While the supply of Lilly’s drug seems adequate for now, Novo is having to ration its GLP-1 medicines. This week they announce they will restrict sales of low Ozempic doses in Europe to manage an apparently growing mismatch between supply and demand. They’re also cutting back the supply of liraglutide (Victoza and Saxenda brands) to cope with demand for semaglutide.

Despite its production worries, Novo is moving to launch semaglutide for obesity in Asia. With a competitor on their heels, they just can’t wait for production to catch up.

A Declining Need for Insulin Production

All this contrasts rather dramatically with the demand situation for insulin – bread and butter products for both Novo Nordisk and Lilly. Yes, they keep innovating. But the demand for insulin is sliding while demand for newer drugs explodes. The possibility for slack in insulin production capacity does not seem to be of much help with meeting demand for semaglutide.

Indeed, the needs of the world for obesity and diabetes treatment are setting up quite an interesting game of catch-up for Novo Nordisk and Lilly. It will get even more interesting when other competitors enter.

Click here and here for further perspective on the challenge of an adequate supply for these drugs.

Once It Chased Dr Wilkerson into the Very Town Itself, painting by Howard Pyle / WikiArt

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November 25, 2023