Novo Nordisk cuts price of weight-loss drug as rival Eli Lilly steps up 

The two companies are going head-to-head in a market that analysts estimate could be worth as much as €93.4bn by the end of the decade

Novo Nordisk, the Danish maker of Wegovy, is worth €540.4bn.

Novo Nordisk raised its 2024 outlook as the Danish drug maker races to boost output of its Wegovy weight-loss treatment, while competition from rival Eli Lilly forced the company to cut prices of the drug, knocking its shares.

This is Novo Nordisk's second set of results since Lilly launched obesity drug Zepbound in the US in December and highlights the fast-changing dynamics as the two companies go head-to-head in a market which analysts estimate could be worth as much as $100bn (€93.4bn) by the end of the decade.

Prices for Wegovy and diabetes treatment Ozempic, which contains the same active ingredient, fell in the first quarter amid increased volumes and competition, the company's chief financial officer Karsten Munk Knudsen told analysts.

"Given increasing volume and competition, net pricing like-for-like will be down in the US," he said, adding that the trend would continue through the rest of the year.

The company reported better-than-expected first-quarter profits, but analysts said the performance was boosted by one-off factors, while underlying growth was a little weaker than expected and Wegovy sales came in lower than market expectations.

Before Thursday's earnings, Novo was worth some €540.4bn, on the back of Wegovy's popularity, making it the most valuable company in Europe by market capitalisation. 

The shares have risen around 260% since Wegovy's launch in the US in June 2021. Novo executives said the company is gradually increasing the supply of lower-strength or "starter" Wegovy doses in the US, after restricting supply of those doses last May to cope with demand. Shortages there persist.

Weekly injection

About 27,000 new patients in the US are now starting on the weekly injection each week, chief executive Lars Fruergaard Jorgensen told the media.

"This is really a very nice volume ramp, as we were planning for," he said. 

That is a more than five-fold increase in the US supply of starter doses since December.

Online pharmacies and slimming clinics are cutting prices for Wegovy and Lilly's Mounjaro in Britain just months after the weight-loss drugs were launched there, as initial supply shortages ease.

Novo's growth has been held back by its ability to ramp up production quickly enough to meet demand. Eli Lilly is also expanding its manufacturing capacity to roll out its Zepbound therapy in new markets.

Lilly has said it expects significant production increases in the second half for its obesity treatment and raised its annual sales forecast by $2bn. It has so far launched Zepbound in Germany, Poland, and Britain this year, after the US launch in December.

Novo launched Wegovy this week in Spain and will launch the injection in Canada on May 6, which will bring the total number of markets where it is available to 11. 

• Reuters