Obesity drug shortage ends for Lilly, continues for Novo as industry ramps up production

The FDA this week officially confirmed that shortages of Eli Lilly's hugely popular GLP-1 drug tirzepatide – branded Mounjaro for type 2 diabetes and Zepbound for weight control – are over, while the lowest dose of Novo Nordisk's rival obesity drug Wegovy is missing is still available in limited quantities.

The controller in a opinion said Lilly has assured the FDA “that its stated product availability and manufacturing capacity can meet current and projected national demand” for tirzepatide in the United States

Evan Seigerman, an analyst at BMO Capital Markets, wrote in a note to investors on Thursday that Lilly's ability to maintain supply of its blockbuster weight-loss drugs was “a key differentiator” that could allow the company to continue to pursue Novo stealing market share. Heading into third-quarter earnings season, Seigerman opined that “Lilly's offering strength could soon benefit the company.”

Lilly reports third-quarter results on October 30, while Novo is expected to report its financial results on November 6. However, rival pharmaceutical giants' second-quarter results in August showed that competition between Wegovy and Zepbound with Lilly is becoming increasingly fierce Closing the market share gap with Novo. The Danish drugmaker reported lower-than-expected second-quarter sales for Wegovy, which were negatively impacted by supply shortages.

Doug Langa, executive vice president of North America operations at Novo, told analysts Earnings announcement for the second quarter that the company will continue to “dynamically” manage supply of the Wegovy starting dose strength of 0.25 milligrams to ensure that patients starting treatment can continue without interruption. “We think it's really important that patients are able to dose correctly,” Langa said.

However, as this lowest dose of Wegovy remains on the FDA's drug shortage list, GlobalData analyst Sara Reci warned that “these limitations have created a bottleneck in Wegovy's market performance.”

Jefferies analyst Peter Welford reiterated that sentiment in a Friday note to investors. “Scripts for the 0.25 mg starter dose are at -37% w/w and Novo is known to be limiting this offering to limit new patient enrollment, perhaps reflecting current supply shortages just at the time Competitor Lilly has solved the bottlenecks at Mounjaro/Zepbound. ”

Next wave of GLP-1

In the GLP-1 space, a lot of attention is being paid to the Lilly-Novo duopoly, which is expected to retain around 70% of a total potential market of $200 billion, according to a Report last month from PitchBook and Morningstar. However, 16 new anti-obesity drugs could come to market by 2029, with about $70 billion of the GLP-1 market coming from these newcomers by 2031.

This week we were reminded that companies developing next-generation weight loss drugs are on the horizon, looking to challenge the market dominance of Lilly and Novo. Regarding Big Pharma competitors, Roche said at a Pharma Day event on Monday that three drug candidates for obesity and early-stage diabetes had been withdrawn from the program $2.7 billion acquisition of Carmot Therapeutics could bring in annual sales of more than $3.6 billion.

Additionally, several startups are also diving into the weight loss space.

Kailera Therapeutics launched on Tuesday $400 million in Series A Funding to bring to market four Chinese-developed injectable and oral candidates for chronic weight management. On the same day, Metsera a supply-oriented partnership with Amneal Pharmaceuticals for its pipeline of next-generation weight loss therapies.

Coming out of stealth in April with $290 million in financingMetsera is partnering with Amneal as a preferred supplier of MET-097 – Metsera's investigational long-acting GLP-1 injectable drug – in the US and Europe for an undisclosed royalty.

Les Sulewski, an analyst at Truist Securities, predicted in a note to investors that Amneal, which will invest up to $200 million in a new manufacturing facility in India and will be funded in part by Metsera and the Indian government, will become a “supplier to the Choice” for the next generation GLP-1s could become.

“There do not appear to be provisions in place to allow Amneal to pursue additional GLP-1 contract manufacturing partnerships, including current branded drugs as well as those in investigation, including long-acting injectables,” Sulewski wrote. “Furthermore, we believe that Amneal will have the ability and desire to conquer the generic side after LOE [loss of exclusivity] around current brand GLP-1.”

As the biopharma industry struggles to meet the insatiable demand for these drugs, Amneal appears to have taken the “if you build it, they will come” approach.