Op-Ed: Is this the end of Ozempic’s rule?
The injectable drug Ozempic is shown Saturday, July 1, 2023, in Houston. Source: AP Photo/David J. Phillip
Editor’s Note:
This piece was written in December 2024. Subsequent events have rendered some details outdated. Readers are encouraged to consult current sources after reading to ensure they have the most up-to-date information.
Ozempic, a semaglutide drug (GLP-1) originally made to treat diabetes, is a word that has grown to become a part of the cultural lexicon. This medication has reached beyond its initial intended usage, rather becoming a sort of weight-loss remedy for celebrities and beauty standards. The demand has been skyrocketing, the GLP-1 market overall is predicted by J.P Morgan to explode to be worth over $100 billion in 2030, from the now estimated worth of $47 billion dollars. This is evident in the stock performances of the drug manufacturers as well. Novo Nordisk, Ozempic’s parent company has been reaching new highs in the stock market with over 260% of growth in the last 5 years, a level of performance mirrored by their U.S. competitor, Eli Lilly. However, recent slumps in both companies’ stocks and sales tells a different story.
Novo Nordisk with their star-seller Ozempic has recently fumbled in its sales department. The Denmark based pharmaceutical giant who also sells Wegovy, a weight-loss treatment that shares similar medical mechanics, has experienced a nosedive in stock performance. This is only a continuation from a saga of disappointing market and product development performances from the company - starkly different from the projections of a soaring performance trajectory from earlier this year.
Despite the endorsements of pop culture weight loss transformations, the market has been predicting a drop in Ozempic sales, and as is common in the market, the stocks followed expectations. After the devastating earnings loss of Eli Lilly, Ozempic did not prove themselves different. Missing target sales goals, one may wonder how we got to this low point? Was the company not setting it up for success? Novo Nordisk had reportedly already been amping up manufacturing, even investing in more facilities to speed up the process.
Although the surge in interest for weight loss treatments meant sales for these pharmaceutical giants, the momentum had been slowing down in the last year. Mounjaro, Eli Lilly’s star seller, though was in high demand in early 2024, saw a decline in sales due to lowered wholesaler interest. Novo Nordisk could not keep up with the supply chain speed ups with increased demands.
Earlier this year, the increase in Mounjaro interest led to a surge in demands that supply could not have kept up, which Lilly sought to expand their manufacturing process and fill orders back up. Now, however, as the demand falls, surpluses have mounted due to slowed orders from wholesalers who were relying on inventory rather than reordering. The disruption may be attributed to the company’s elevated operational costs, including both acquisition and manufacturing expenses.
Sensing panic, the Danish pharmaceutical giant seems to respond with a series of new product rollouts, attached with approval stages of research assuring the market that they are developing other projects that can grasp new customers. Cagrisma is a newly developed treatment that combines the power of Wegovy with another chemical, cagrilintide to produce more effective weight loss at 25%.
Barron’s Reporter reported that Eli Lilly’s Mounjaro and Zepbound are no longer at a shortage, meaning increased supply to feed the stabilizing demand of these weight-loss treatments. With the lessening commotion surrounding the drugs’ ‘hard to get’ value, markets may no longer live on the heightened anticipation of price hikes based on the previously widening supply and demand gap.
In addition to Novo Nordisk and Eli Lilly’s internal concerns, a new force of GLP-1 treatments have come into play. Compounded drugs have become significantly more popular among customers who previously relied on both companies’ products. Hims & Hers, a telehealth company who provides compounded GLP-1 treatments at a fraction of the original cost, “as low as $79/month,” has made the semaglutide drug market competition more fierce. These compounded products that involve mixing of semaglutide medications are not always FDA-approved, raising concerns in its quality and safety. However, because of low supply available in the traditional drug market, as well as affordability issues, some patients and users choose to look for alternative treatment methods online, at websites like Hims & Hers whose stocks have increased in the last few months as compared to Novo and Lilly.
Both Eli Lilly and Novo Nordisks’ rising track record in stocks and company performances may have shone through in the sudden boom in demand in the past. But with market investors’ confidence in the lasting ‘hype’ around these drugs start waning - as told in the recent declining stocks, as well as the rise of alternative and competing options for semaglutide treatments - what is left of the companies stock piles that they’ve worked so hard to fix?