Novo Nordisk has seen its stock market value multiply five-fold in six years to reach nearly $600 billion in 2023, making it the leading European company and the fifteenth in the world. But we cannot approach the peaks of stock market valuation, or approach tech giants like Meta or Amazon, without exposing ourselves to some inconvenience. The pharmaceutical laboratory had the unpleasant experience of this on September 24, 2024.
That day, Novo CEO Lars Fruergaard Jørgensen found himself facing a US Senate hearing committee. On the grill, like before him Mark Zuckerberg (Meta/Facebook), Tim Cook (Apple) or Sundar Pichai (Google). This time, it was not about online hatred, fake news or the protection of children on social networks, but about a subject that is largely as sensitive in the United States: the price of medicines.
Novo’s outrage against America
Novo Nordisk’s new star drugs, Ozempic and Wégovy, for diabetes and obesity respectively, are sold to American patients for around $1,000 per month, compared to 250 francs in Switzerland. Across the Atlantic, patients have great difficulty finding insurers who agree to reimburse these treatments in the long term. To remedy this, elected officials like Senator Bernie Sanders are asking their manufacturer to lower its prices, described as“outrageous”.
Perhaps sensing the wind coming, its American competitor Eli Lilly took the lead in August 2024. The company, which produces GLP-1 analogues in competition with those of Novo Nordisk, halved the selling price of Zepbound, its main obesity drug, which now costs around $500 a month. A gesture of… quite relative generosity.
Because if it earned the praise of President Joe Biden on It only concerns the two lowest dosages of the drug (those taken at the start of treatment), its version in a bottle (and not an injector pen) and only patients who buy Zepbound out of their pocket, directly from the laboratory’s online sales site…
To explain such prices, we naturally cannot rule out the greed of pharmaceutical companies. But there is another reason why political pressures have so far had a limited effect, both on Novo and Lilly: the shortage. And it turns out that it could bring good fortune to three chemical companies, at Swiss discretion: Bachem, PolyPeptide and Cordent Pharma.
Please don’t buy my product
Neither Novo Nordisk nor Eli Lilly had in fact anticipated the phenomenal success of GLP-1 analogues, nor the production capacities necessary to meet this demand. This is what leads to shortages and funny situations. Do you know many companies that pay for a television advertising campaign to tell consumers not to buy their products?
Yet this is what Eli Lilly did on the eve of the 2024 Oscars ceremony. Moving from the red carpet and the crackle of paparazzi flashes to the ordinary life of a woman on the subway, a television spot entitled Big Night explained that if GLP-1 analogues make you lose weight, it is not to fit into an elegant evening outfit but to treat the sick.
Certainly, this spot did not name Eli Lilly’s Mounjaro and Zepbound specialties, probably to avoid the long litany of warnings that accompany advertisements for medications prescribed in the United States. Across the Atlantic, the pharmaceutical industry is the second largest advertiser, behind mass distribution and ahead of consumer electronics and automobiles.
And it’s not as if Lilly and Novo had hesitated to promote their products on the lucrative American market, the only one in the world where labs are free to set their prices. In 2023, the advertising expenditure of the two companies for their new appetite suppressants in the United States had thus exceeded 1 billion dollars, or 15% of the 7.6 billion spent last year by the pharmaceutical sector for this purpose. But that was before the Oscars turnaround.
Ozempic is not for the stars
The choice to broadcast this astonishing advertising spot at the time of the Oscars owes nothing to chance. During the previous edition, his Ringmaster, host Jimmy Kimmel, joked: “When I look at this room, I can’t help but ask myself questions. Would Ozempic suit me?” The overt or unacknowledged use of GLP-1 analogues by celebrities is a never-ending topic of commentary on social media.
On CNN, Eli Lilly CEO David Ricks gave his explanation of the counterintuitive advertising broadcast by his company. “We have a point of view on how these drugs are used currently. They were invented for people with serious health problems, not to make famous people look a little better.”
This is also what most doctors specializing in diabetes or obesity who are concerned about shortages think. For Dr. Lucie Favre, head of the CHUV obesity consultation, the shortages that appeared in the summer of 2023 essentially come from the ease of prescribing these medications by any doctor to patients who just want to lose a few pounds. “This means that diabetic or obese patients sometimes have to interrupt their treatments”she warns. The Swiss Society of Endocrinology has contacted the OFSP on this subject, without success for the moment.
A global bottleneck
Officially, Eli Lilly and Novo Nordisk explain these shortages by the explosion in demand. Lilly, which has a site dedicated to this situation, mentions a “extraordinary growth”. Novo Nordisk, which also has its site (but only for the American market), explains: “We will do our best to support those who want to start taking Wegovy, but it is important to recognize that overall demand will continue to outstrip supply.”
Due to a lack of production capacity, the two giants are currently limiting the distribution of their anti-obesity drugs to a few countries. Wegovy is only sold in around ten countries (Switzerland, Denmark, Germany, Iceland, Norway, United Arab Emirates, United States, United Kingdom and recently China, Japan and Australia). And Zepbound, in even less (Switzerland, United States, Canada, United Kingdom, Australia and China).
Countries where obesity is high, such as Saudi Arabia (38% of the population, according to the World Obesity Federation) or Brazil (29%), therefore do not have access to Wegovy and Zepbound. For lack of anything better, doctors often fall back on the antidiabetic version of the molecule, which spreads the shortage to other patients. We remain far from being able to take care of the billion people suffering from obesity in the world, not to mention the additional billion and a half people who are simply overweight.
On the production side
Extraordinary demand is one dimension of the problem, but there is another, which relates to supply and industrial know-how. GLP-1 analogues are peptides, which are more complex and more expensive to produce than small chemical molecules or other biological molecules like antibodies. Remaining a pharmaceutical niche until recently, these peptides had never been produced on the scales required for Ozempic and others.
And this is where three Swiss flagships of peptide chemistry have a trump card to play.
Faced with the shortage, both Novo and Lilly are investing massively. We have seen how the Danish company deploys around 8 billion francs in five years on its historic site in Kalundborg in Denmark. Added to this are more than two billion francs to double the size of its factory in Chartres (France), 3.5 billion for that of Clayton (North Carolina), as well as half a billion for its Chinese site. The takeover of the subcontractor Catalent and its numerous factories by the Novo Nordisk foundation in February 2024 is also to be put on this slate, which therefore reaches some 30 billion.
Eli Lilly is not to be outdone, with almost $20 billion in investments announced since 2020 to expand or build seven factories in Indiana, North Carolina, Germany and Ireland. The American company also bought the factory of a subcontractor, Nexus Pharmaceuticals. But these new factories, which will not start producing at best before 2027, could prove insufficient.
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