The Pill War Heats Up: Novo Relies On Wegovy To Reclaim Leadership From Eli Lilly

The Wegovy pill from Novo Nordisk is providing the Danish pharmaceutical company with an opportunity to regain its market share from Eli Lilly. This latest entrant into the booming global weight-loss drug market has already launched at a faster pace than almost any previous pharmaceutical product.

The once-daily Wegovy pill received approval from U.S. regulators in late December. By the end of February, American doctors had issued more than 300,000 prescriptions for the medication, according to data from IQVIA. The United States is currently the only country where the drug has been launched. For the Danish drugmaker, this represents a significant positive development. The company, the pioneer behind the "Ozempic" brand—which became synonymous with blockbuster weight-loss drugs—held a dominant position until 18 months ago.

However, since then, the company has fallen behind its rival Eli Lilly in the vital U.S. market, as its shares were hit hard by intensifying competition, disappointing clinical results, and concerns regarding its pipeline products, future sales, and profits. The strong early demand for Wegovy pills, which led to an average weight loss of 17% in trials, offers Novo a chance to reclaim its standing.

Brian Lian, CEO of Viking Therapeutics—a San Diego biotech firm working on weight-loss drugs—described this launch as "the fastest drug launch in history." It was accompanied by a massive multimedia advertising campaign, including Novo’s first-ever commercial during the Super Bowl. "This clearly shows the immense demand for these treatments," Lian said. Just as Apple and Samsung have long competed for dominance in the smartphone market, Novo and Eli Lilly are vying for leadership in the weight-loss drug market.

While Eli Lilly currently leads in market share, the battle is now shifting toward pills. The transition to oral treatments is widely seen as key to expanding the market; before the emergence of Wegovy pills, these popular new drugs had to be administered via injection. Novo's medication reached American medicine cabinets first, but Lilly’s weight-loss pill, "Orforglipron"—which achieved an average weight loss of 12.4% in trials—is expected to receive regulatory approval in April.

After previously being Europe’s most valuable company by market capitalization due to the resounding success of Ozempic, Novo is now smaller than its European rivals AstraZeneca, Roche, and Novartis by that metric. Its shares have dropped by more than 50% over the past 12 months and are currently trading at less than two-thirds of their peak value in June 2024. In contrast, Eli Lilly has become a trillion-dollar company thanks to the success of its weight-loss drugs. After struggling to compensate for lost sales when patents for some of its most profitable drugs expired in the 2010s, Tirzepatide—sold as "Zepbound" for weight loss and "Mounjaro" for diabetes—has become the second-largest drug in the world by sales.

Evan Seigerman, an analyst at BMO Capital Markets, believes the successful launch of Wegovy in the U.S. shows that Novo has "learned from its mistakes." After previously facing difficulties adjusting its supply chain to meet massive demand, the company has now increased its production capacity and also has a program to sell the drug directly to consumers, bypassing pharmacy benefit managers. He stated that this drug was "likely one of the fastest launches we've ever seen" in the pharmaceutical sector. He added: "I don't think I've ever seen anything like this before. This drug is now widely available, very popular, and easy to obtain." He noted that Novo "has had the opportunity to regain some of its market share through this drug, but only until Lilly’s Orforglipron is approved."

Nevertheless, the Danish pharmaceutical company still faces several challenges. Semaglutide, the active ingredient in Wegovy and Ozempic—treatments for weight loss and diabetes respectively—will lose patent protection in India, China, Brazil, and Turkey this year. The company has already lost patent protection in Canada, the world's second-largest market for weight-loss and diabetes drugs.

In Brazil, 11 manufacturers have applied for regulatory approval to produce generic weight-loss drugs following the expiration of Novo’s patent protection in the country next month, according to Jefferies. In India, approximately 40 local companies are expected to compete to slash weight-loss drug prices by half, according to the investment bank.

While Novo’s Wegovy pills must be taken on an empty stomach, requiring patients to wait at least 30 minutes before eating, drinking, or taking other oral medications to allow time for absorption, Lilly’s pills do not suffer from the same restrictions. Mike Doustdar, CEO at Novo, acknowledged that Novo's pills have limitations because they are not taken with food, but said: "This has not been a major concern for patients. People go for a shower, get dressed, go downstairs or elsewhere to have their breakfast, and before they realize it, the necessary half-hour has passed."

Lilly's dominance in the U.S. market is evident from prescription data. The number of prescriptions for the company's weight-loss drugs, including diabetes treatments, reached 1.4 million by the end of February, according to IQVIA data. Meanwhile, the number of prescriptions for Novo’s weight-loss drugs—including both pills and injections—reached 924,000, though these figures do not include all the company’s online sales. Doustdar told the Financial Times that more than 600,000 prescriptions for Wegovy pills alone have been issued since their launch.

Michael Nedelcovych, an equity research analyst at TD Cowen, said Wegovy pills might give Novo a chance to compete. He added: "If Novo can successfully navigate the launch phase and gain greater market access, it will be one way to compete." The most important question remains: price. According to Dr. Daniela Hurtado Andrade from Jacksonville, Florida, some patients who were using Lilly’s injections for weight loss switched to Novo’s Wegovy pills "simply because they are cheaper."

Novo is selling the lower doses of Wegovy, at concentrations of 1.5 mg and 4 mg, for $149 per month in the U.S. until April, when the price of the 4 mg dose will rise to $199 per month.

Patients with health insurance may pay as little as $25 per month for the lower doses. The higher doses, at concentrations of 9 mg and 25 mg, cost $299 per month. For weight-loss injections, the price for those without insurance can reach $1,300 per month. With insurance and discounts, the price drops significantly. Eli Lilly has announced it will sell Orforglipron for $149 per month, while higher doses will cost up to $399. Pricing may help determine how quickly these pills spread in the market, with indications that oral weight-loss drugs are attracting new patients; a Goldman Sachs report noted that the "unprecedented" demand for the pills came from new users rather than people switching from injections.