Novo Nordisk vs Eli Lilly: Obesity Drug Market Explained
Novo Nordisk and Eli Lilly: The Obesity Drug Market Explained
Sanjay Oberoi
worked for numerous big names in the sector, including Fidelity Investment, Allianz Global Investor, Union Investment, and Kepler Cheuvreux.
Novo Nordisk and Eli Lilly: The Obesity Drug Market Explained
Two companies account for the overwhelming majority of the global market in obesity and diabetes medicines built on gut-hormone science. Novo Nordisk, the Danish company that established the category, and Eli Lilly, the American company whose products have since taken the larger share of new prescriptions in several markets.
This article sets out what these medicines are, how the two companies are positioned, what has happened in the most recent product launches, how pricing and patent protection are changing, and who else is entering the field. It reports facts and, where a matter is disputed, identifies who is making which argument. It does not offer a view on either company as an investment.
What these medicines are
After eating, the human gut releases hormones that signal fullness to the brain, slow the emptying of the stomach and prompt the pancreas to release insulin. These are known as incretin hormones. The natural versions break down within minutes.
The medicines at the centre of this market are engineered versions of those hormones, modified to resist the enzymes that degrade the natural form, allowing them to be dosed weekly rather than continuously. Patients report feeling full sooner and for longer, and consuming less food overall.
The class was developed for type two diabetes, where the effect on insulin release is the therapeutic goal. Weight reduction was observed as a consistent secondary effect, and higher-dose versions were subsequently developed and approved specifically for weight management.
An early scientific input to the field came from a compound identified in the venom of the Gila monster, a large lizard native to the southwestern United States, which resembles the human hormone but resists the enzymes that break the human version down.
The two molecular generations
Novo’s principal molecule, semaglutide, mimics a single gut hormone. It is marketed under the brand name Ozempic for diabetes and Wegovy for weight management.
Lilly’s principal molecule, tirzepatide, acts on two hormone pathways rather than one. It is marketed as Mounjaro for diabetes and Zepbound for weight management.
In clinical trials, the dual-acting molecule has produced greater average weight reduction than the single-acting one. A head-to-head trial comparing the two in patients with obesity, published in the New England Journal of Medicine, found greater weight loss in the tirzepatide group.
The named clinical programmes
Both companies run their trials under programme names that recur in regulatory filings and medical reporting, and knowing them makes primary sources easier to follow.
Novo’s weight-management trials for semaglutide ran under the STEP programme. Its diabetes trials ran under SUSTAIN and, for the oral formulation, PIONEER. The SELECT trial examined cardiovascular outcomes in patients with overweight or obesity and established cardiovascular disease, and is the study on which subsequent cardiovascular labelling was based. The ESSENCE trial examined the liver condition metabolic dysfunction-associated steatohepatitis. The REDEFINE programme covers the CagriSema combination.
Lilly’s diabetes trials for tirzepatide ran under SURPASS, and its obesity trials under SURMOUNT. The SURMOUNT-OSA trials examined obstructive sleep apnoea. The SUMMIT trial examined heart failure with preserved ejection fraction. The ATTAIN programme covers the oral compound orforglipron, and the TRIUMPH programme covers retatrutide.
The direct comparison between the two companies’ injectables was conducted under the fifth SURMOUNT protocol and published in the New England Journal of Medicine.
How the market developed
Obesity had historically been an unsuccessful field for pharmaceutical companies, with several earlier drugs withdrawn from the market over cardiovascular or psychiatric safety concerns. Payers generally classified weight-loss treatment as a lifestyle rather than a medical intervention and declined to reimburse it.
Approval of higher-dose incretin medicines specifically for weight management, combined with documented average weight reductions substantially larger than earlier treatments had achieved, changed that position. Demand rose faster than either manufacturer could supply.
The shortage period
Both companies’ products were placed on the United States Food and Drug Administration’s official drug shortage list. Under American regulations, compounding pharmacies may produce their own versions of a drug while it is formally in shortage.
A substantial parallel supply emerged through compounding pharmacies and telehealth platforms, selling copies at prices well below the branded list price. When the FDA declared the shortages resolved, that permission lapsed and compounders were required to cease production, subject to transition deadlines and subsequent litigation from parts of the compounding industry.
Both manufacturers subsequently launched their own direct-to-consumer cash-pay channels, at prices below their list prices.
The two companies
Novo Nordisk
Novo Nordisk is headquartered in Bagsværd, Denmark, and has specialised in diabetes care since the nineteen-twenties. Diabetes and obesity treatments account for the large majority of its revenue. Rare disease treatments make up the remainder.
The company is controlled by the Novo Nordisk Foundation through a holding company, which holds a minority of the share capital but a majority of the voting rights. The Foundation is a charitable body that funds scientific research.
In the year to September, the company appointed Mike Doustdar as chief executive, replacing Lars Fruergaard Jørgensen. It announced a reduction of approximately nine thousand roles, with a stated annual cost saving target, and lowered its financial guidance on more than one occasion. In a subsequent corporate rebrand, the company shortened its operating name to Novo, retaining Novo Nordisk as its legal entity name, and introduced a stated set of corporate values described as customer focus, competitiveness, clarity, and care and integrity.
Eli Lilly
Eli Lilly is headquartered in Indianapolis, Indiana, and was founded in the eighteen-seventies. Alongside its diabetes and obesity products it has commercial positions in oncology, immunology and neuroscience, including an approved treatment for early Alzheimer’s disease.
The company’s incretin products have become its largest source of revenue growth. During the period covered here its market capitalisation reached approximately one trillion dollars, a level no pharmaceutical company had previously attained.
The oral products and their launches
Both companies launched oral formulations during the year. This removed the requirement for weekly self-injection, which both companies and independent analysts have identified as a barrier to adoption.
Lilly’s product, orforglipron, marketed as Foundayo, is a small molecule rather than a peptide. It can be taken without restrictions on food or water timing, and because it is manufactured by conventional chemical synthesis rather than biological production it can be made at greater scale and lower cost than injectable peptides.
Novo’s product is an oral formulation of semaglutide marketed under the Wegovy brand. It must be taken in a fasted state, with the patient waiting before eating.
Prescription performance to date
According to prescription data tracked by IQVIA and reported by Fierce Pharma, as of mid-September the Novo oral product was recording approximately one hundred and eighty-three thousand weekly prescriptions, against approximately forty-seven and a half thousand for the Lilly product — roughly a four-to-one gap. The gap has persisted since both launches, though the Lilly product has shown steady growth, particularly following expanded pharmacy benefit manager coverage.
Analysts at Jefferies described the early prescription data for the Lilly product as “disappointing vs. expectations”, noting it trailed the Novo product’s trajectory at comparable points after launch. Some analysts have cautioned that IQVIA data may undercount telehealth prescriptions, which could understate the Lilly product’s actual uptake. Several have maintained their sales projections for the product on the expectation that insurance coverage will broaden.
Documented differences in market access
Two differences between the launches have been identified in trade reporting.
The Novo product secured full pharmacy benefit manager formulary coverage at launch. The Lilly product received staggered coverage, with CVS Caremark, the largest pharmacy benefit manager, adding it in June.
The Novo product carries the same brand name as the company’s established injectable. Analyst Jim Hickey attributed part of the difference in uptake to that existing brand familiarity, noting that Lilly was required to establish a new brand name at the same time as entering the market.
A Medicare bridge programme, launched on the first of July, set a monthly copayment of fifty dollars for the Lilly product for eligible beneficiaries.
How American market access works
The difference in launch performance between the two oral products is not intelligible without understanding how a medicine reaches an American patient, so this section sets out the mechanism.
Regulatory approval by the Food and Drug Administration establishes that a medicine may be sold. It does not establish that anyone will pay for it. That is decided separately by insurers, and in practice by the pharmacy benefit managers that insurers employ to negotiate with manufacturers and administer drug benefits.
Three pharmacy benefit managers administer the large majority of American prescription drug benefit: CVS Caremark, Express Scripts, owned by Cigna, and Optum Rx, owned by UnitedHealth Group. Each maintains a formulary, the list of medicines it will cover and on what terms.
A medicine placed on formulary is dispensed to the patient at a copayment. A medicine not on formulary is available only at list price, which for this category has been several hundred dollars a month or more. Manufacturers negotiate formulary placement by offering rebates against list price, which is why list prices and the prices actually realised by manufacturers differ substantially.
Formularies are typically revised on a scheduled cycle, most commonly at the start of a calendar year, though additions can be made between cycles. A product approved shortly after a formulary cycle closes may therefore wait months for coverage regardless of its clinical merits.
Additional mechanisms apply within coverage. Prior authorisation requires a physician to document that the patient meets defined criteria before the prescription is filled. Step therapy requires that the patient try a preferred product first. Both apply commonly to this drug class.
These mechanisms explain the documented difference between the two oral launches described above: one product had formulary access at launch and the other did not.
Access outside the United States
Reimbursement arrangements differ substantially by country, and the American picture is not representative.
In the United Kingdom, the National Institute for Health and Care Excellence assesses cost effectiveness and issues guidance determining National Health Service availability. Guidance for weight-management use of this class has included restrictions on eligibility and, in some cases, on the setting in which treatment may be initiated, with phased rollout over a period of years to manage the effect on health service budgets.
In Denmark, Novo’s home market, public reimbursement for weight-management use was narrowed after expenditure rose faster than budgeted.
Across the European Union, approval is granted centrally by the European Medicines Agency, but pricing and reimbursement are decided by each member state, producing significant variation in availability and patient cost within the single market.
During the shortage period, both companies restricted launches in additional countries and in some cases prioritised supply to existing diabetes patients over new weight-management patients, a decision that drew comment from patient groups and health authorities in several markets.
Formulations and devices
The injectable products are supplied in prefilled pen devices for weekly subcutaneous self-administration. Treatment begins at a low dose and is increased in steps over a period of weeks or months, a schedule intended to reduce gastrointestinal side effects. Each dose step has historically required a separate device presentation, which multiplies the manufacturing and distribution complexity relative to a single-dose product.
During the shortage period, some supply was made available in vials requiring separate syringes, as a way of increasing the number of doses that could be filled with available capacity.
The oral products are tablets. The peptide-based tablet requires administration in a fasted state with a limited volume of water, followed by a waiting period before eating or taking other medicines, because absorption of a peptide through the digestive tract is inefficient and is affected by stomach contents. The small-molecule tablet does not carry these restrictions.
Products in development
Eli Lilly
Retatrutide is a triple-acting compound targeting three hormone pathways. Late-stage trial results have shown average weight reduction in the range of twenty to twenty-two per cent, higher than currently marketed products in the class. The company has stated it plans to submit a Biologics License Application in the early part of next year.
Novo
CagriSema combines semaglutide with cagrilintide, an agent that mimics a different hormone, amylin. The combination is approaching a regulatory decision in the United States. Trial results published in the period were below the level some analysts had projected, and the company’s shares fell following their release.
Novo also reported the failure of a separate late-stage cardiovascular trial of an interleukin-six inhibitor, an asset outside the incretin class.
Manufacturing
Peptide medicines require biological or complex synthetic production, purification to pharmaceutical standard, sterile filling into injector devices, assembly and cold-chain distribution. Facilities take years to build and require regulatory qualification.
Eli Lilly has stated commitments exceeding fifty billion dollars to expanded manufacturing capacity in the United States, and has said it is building inventory in advance of product launches to avoid the supply constraints that affected earlier introductions in the category.
Novo’s parent group acquired Catalent, a contract manufacturer with sterile fill-finish capacity, in a transaction structured so that Novo Nordisk purchased three of the resulting sites.
Oral small-molecule products do not require sterile injectable manufacturing and can be produced at substantially higher volumes and lower unit cost.
Approved and investigated uses beyond weight
Reimbursement in most healthcare systems depends on approved indication. Both companies have pursued approvals beyond weight management.
Documented or approved uses across the class now include reduction of major adverse cardiovascular events in patients with established cardiovascular disease and overweight or obesity; obstructive sleep apnoea; chronic kidney disease in patients with type two diabetes; and metabolic dysfunction-associated steatohepatitis, a liver condition.
Trials are ongoing or reported in peripheral arterial disease, heart failure with preserved ejection fraction, knee osteoarthritis, and alcohol use disorder. Research programmes examining possible effects in neurodegenerative disease have been initiated, with results not yet reported.
Several of these indications were secured by one company and not the other, which affects which product a payer will reimburse for a given patient.
Pricing and government policy
Both manufacturers entered agreements with the United States administration to apply most-favoured-nation pricing to incretin medicines. Under the terms announced by the Academy of Managed Care Pharmacy, both companies agreed to extend most-favoured-nation pricing across Medicare, Medicaid and commercial payers; to apply it to newly launched medicines; and to participate in a direct-to-consumer distribution platform.
The published terms included the following. Injectable products were made available through the government platform at approximately three hundred and fifty dollars per month, against a typical cash price of four hundred and ninety-nine dollars. Starting doses of oral products were set at one hundred and fifty dollars per month subject to approval. Injectable products were priced at two hundred and forty-five dollars per month for Medicare beneficiaries across all doses and indications, with patient copayments capped at fifty dollars. State Medicaid programmes were granted access to the same pricing.
The administration additionally proposed permitting Medicare coverage of obesity medicines, reversing a statutory prohibition that had previously excluded weight-loss drugs from coverage.
Commentators have noted that these arrangements reduce revenue per patient while potentially increasing the number of patients covered. The net effect has not yet been established in reported results.
Patent protection
Semaglutide, the older of the two principal molecules, has already lost patent protection in India, where local manufacturers have launched generic versions. Protection expires in Canada, Brazil, China and several other markets over a compressed period, and in the United States and major European markets in the early part of the next decade.
Tirzepatide, the newer molecule, retains protection for a longer period.
Reporting in Chemical and Engineering News has documented substantial preparation by generic manufacturers ahead of these expiries. Launches in markets where protection has already lapsed have been at discounts reported at up to seventy per cent to branded prices.
Generic manufacturers preparing for expiry
In India, where semaglutide protection has already lapsed, generic versions have been launched by domestic manufacturers including Dr Reddy’s Laboratories, Sun Pharmaceutical Industries, Cipla and Lupin, among others. Industry reporting has described a large number of Indian companies preparing filings for the molecule.
Manufacturers in Canada, Brazil and China have similarly prepared for expiry in their markets. Reporting in Chemical and Engineering News has documented investment by contract manufacturers in peptide production capacity specifically in anticipation of generic demand, peptide synthesis at scale having previously been a limited capability outside the originator companies.
Both originators hold additional patents covering formulations, devices, manufacturing processes and specific uses, which extend beyond the expiry of the core molecule patents and which have been the subject of litigation in several jurisdictions. The practical effect of these secondary patents on generic entry dates is determined case by case in national courts.
Other companies in the field
Amgen is developing MariTide, a compound administered monthly rather than weekly, which blocks rather than mimics one of the target hormones. Trial results have shown weight reduction of up to twenty per cent.
Pfizer discontinued development of its oral candidate danuglipron. Roche, AstraZeneca and other large pharmaceutical companies have entered the field through acquisitions of smaller developers. A growing number of candidates originating with Chinese biotechnology companies have been licensed to Western partners.
Matthew Arnold of Clarivate has characterised the current state of the field as follows: “Prescriptions have skyrocketed, and the market is getting extremely congested.”
Treatment persistence and side effects
The most commonly reported adverse effects across the class are gastrointestinal: nausea, vomiting, diarrhoea and constipation, most frequent during the period when the dose is being increased.
Published real-world studies have found discontinuation rates materially higher than those observed in clinical trials. Reported reasons include side effects, cost, and patients ceasing treatment after reaching a target weight. Studies examining patients who discontinue have generally found that weight is regained over the following months.
Loss of lean muscle mass alongside fat has been documented in trials of the class and has prompted development programmes aimed at preserving lean mass during treatment, including agents in development at several companies.
Reported effects on other industries
Public companies outside pharmaceuticals have addressed the category in investor communications.
Packaged food, confectionery, restaurant and alcoholic beverage companies have been questioned by analysts on potential effects on consumption volumes, and several have described reformulation toward smaller portion sizes and higher protein content.
Providers of bariatric surgery equipment and of devices for obstructive sleep apnoea have faced similar questions, given that the medicines address conditions their products treat.
Government health bodies in several countries have published assessments of the potential effect on obesity-related healthcare expenditure.
Pending decisions and scheduled events
- United States regulatory decision on Novo’s CagriSema combination.
- Submission by Eli Lilly of a Biologics License Application for retatrutide, stated for early next year.
- Implementation of announced most-favoured-nation pricing terms across Medicare, Medicaid and commercial payers.
- The proposed extension of Medicare coverage to obesity medicines.
- Patent expiries for semaglutide in Canada, Brazil, China and other markets, ahead of United States and European expiry early in the next decade.
- Further pharmacy benefit manager formulary decisions affecting both oral products.
- Reported data from ongoing trials in alcohol use disorder, knee osteoarthritis and heart failure with preserved ejection fraction.
Points of disagreement among analysts
Where informed observers differ, the arguments on each side are set out below with attribution. seat11a takes no position on them.
On the oral launches. Jefferies has described Lilly’s early prescription data as below expectations. Other analysts have argued that IQVIA data undercounts telehealth prescriptions and that coverage expansion will close the gap, and have maintained their sales projections. Projections cited in industry reporting have the Lilly product taking a majority of the oral segment by the end of the decade, against a smaller share for Novo — a projection that is not consistent with current prescription trends and which those making it attribute to expected coverage changes.
On the effect of pricing agreements. Commentators supportive of the arrangements argue that lower prices combined with Medicare coverage expand the treated population substantially. Others have noted that price reductions take effect on a schedule set administratively while volume growth depends on prescriber behaviour, coverage enrolment and manufacturing capacity.
On next-generation products. Analysts citing retatrutide’s trial results describe it as extending the efficacy ceiling of the category. Others have raised the question of tolerability at higher efficacy levels, and of the extent to which a more effective product from the same company transfers existing patients rather than adding new ones.
On market size. Published forecasts for the obesity market vary widely, with estimates in industry reporting ranging into the region of one hundred and twenty billion dollars by the middle of the next decade, and broader incretin market forecasts higher still. These forecasts rest on assumptions about treatment duration, coverage and pricing that have not yet been established in practice.
Summary of the current position
Eli Lilly’s dual-acting injectable has demonstrated greater average weight reduction than Novo’s single-acting injectable in head-to-head trial data, and has taken the larger share of new prescriptions in several markets. Lilly’s pipeline includes a triple-acting compound with higher reported trial efficacy, and its principal molecule retains patent protection for longer.
Novo’s oral product is currently recording approximately four times the weekly prescription volume of Lilly’s oral product, a difference trade reporting attributes to formulary coverage timing and brand recognition rather than to product characteristics. Novo has changed its chief executive, reduced headcount, revised guidance and rebranded during the period.
Both companies have agreed pricing terms with the United States government that reduce revenue per patient and are accompanied by proposals to broaden coverage. Both face an expanding competitive field. Semaglutide’s patent protection expires earlier than tirzepatide’s.
The variables that remain unresolved are how long patients continue treatment, how quickly coverage expansion translates into treated patients, and what price level the category settles at once generic versions are available in major markets.
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