Weight loss treatments bring in billions but capacity remains an issue

The high demand for weight loss treatments has made their rollout a staggered process. Ben Hargreaves finds that, even years after launch, supply remains patchy in the US and the drugmakers are spending billions to fix it.

Weight loss treatments have rapidly emerged as an important area for pharma R&D. According to IQVIA, clinical trials for weight loss therapies grew by 68% between 2022 and 2023. This is being driven by the sales enjoyed by the two major companies in the space, Eli Lilly and Novo Nordisk – propelling the former to be the most valuable pharma company overall, and the latter to become the biggest company in Europe.

However, this has not arrived without some problems for the companies involved. The sales achieved by their weight loss products has put serious strain on their supply, with the weight loss products often sharing production with diabetes treatments with the same ingredients. Both companies have run into difficulties meeting the demand for the products, necessitating heavy investment in manufacturing facilities and bringing in additional outsourcing partners.

Taken by surprise

Novo Nordisk was the first of the two companies to be hit by constraints on supply, as its two GLP-1 agonist drugs, Ozempic (semaglutide) and Wegovy, helped the company achieve record sales. At the time, Novo Nordisk noted that it expected to have intermittent drug shortage issues through to 2024, as it worked on expanding internal and external manufacturing capacity.

Part of the issue for Novo Nordisk was that it did not expect the level of demand that marked the rollout of the drug in the US and then in Europe. The company’s previous generation weight loss drug, Saxenda (liraglutide), did not sell particularly well – though, revenues have since taken off due to the popularity of the second-generation of treatments. The explosion in sales of Wegovy is illustrated by Statista’s chart of sales, where sales increased ten times between the third quarter of 2022 to the fourth quarter of 2023.

Novo Nordisk was forced to limit supply in the US whilst it expanded its manufacturing capacity. A spokesperson for the company told pharmaphorum: “Novo Nordisk has made significant investments and has been steadily increasing capacity to produce more Wegovy than ever before. Since January 2024, we are enabling more new US patients to initiate treatment by more than doubling the amount of the lower dose strengths of Wegovy into the US market, while gradually increasing overall supply throughout the rest of the year.”

However, they noted that the company expects that overall demand will “continue to exceed supply,” meaning that some patients in the US may still have difficulty filing Wegovy prescriptions. It is likely to be a similar story in Europe, where the company has been slowly rolling out coverage of Wegovy. Chief executive of Novo Nordisk, Lars Fruergaard Jørgensen, told the Financial Times that the company had also been surprised by the uptake in Denmark and Norway, where individuals had been prepared to pay out of pocket for the medication.

Lilly has also run into the same demand issues in the US, leading to limited availability across various doses of the company’s Zepbound (tirzepatide) and Mounjaro treatments. The company cited “demand increase for the drug” as the reason on the FDA listing specifying the drug shortages. A spokesperson for Eli Lilly did not respond to a request for comment.

Expanding production

Both companies have reacted by investing heavily in the expansion of manufacturing capacity. This has led to multi-billion dollar investments in new sites to meet the global demand for this generation of diabetes and weight loss treatments. At the end of 2023, this saw Lilly commit $2.5 billion to building a new facility in Germany to produce diabetes treatments.

In February, Novo Nordisk took even more drastic action by spending $11 billion to buy fill-finish sites from Catalent to expand its manufacturing in Europe and the US. Jørgensen specifically stated that the investment would be made to improve Novo Nordisk’s capacity to serve patients with diabetes and obesity. The move arrived only a few months after the company announced that it would spend $6 billion to expand its current manufacturing site in Denmark. The expansion will be focused on active pharmaceutical ingredient production, including GLP-1 products, but also covers other areas of the company’s therapeutic portfolio.

A next-gen solution?

One of the challenges of the product and one of the reasons why production has not been able to be scaled immediately is due to the nature of the treatment. The manufacture of GLP-1 agonists is based on the production of peptides, which pose some difficulty in scale-up due to requiring unique genetically modified cells.

A potential solution to this problem may arrive in the next-generation of weight loss treatments. Both Lilly and Novo Nordisk are engaged in a race, alongside other developers, to create an oral treatment that has similar weight loss efficacy compared with the current subcutaneous delivery forms of treatment. The oral treatments would also be GLP-1 agonists, but production would be far simpler and much cheaper.

This would allow the developer to quickly scale production, potentially lowering the cost of the treatment itself. In turn, this could allow far more patients to receive the treatment – the price of the current generation of weight loss drugs has made it difficult for some to afford the therapies. In the US, there have been notable barriers to access due to the treatments not being covered by insurance companies. The American Medical Associations called for health insurers to provide greater access to those patients in need, citing the costs associated with obesity to the individual patients and the healthcare system.

Whether such calls will be heeded is unclear, but what is clear is that analysts expect the weight loss drug market to continue its rapid expansion to become a highly lucrative market. According to VanEck, an investment management firm, the market could be worth $77 billion by 2030. With an estimated 2.5 billion adults, and growing, being considered overweight by the WHO, this estimation is likely to continue to be raised upwards in the future. This will make questions of access, and affordability, of treatments increasingly pressing. With so much revenue potential, it seems likely that the leading companies will be racing to meet that demand as quickly as possible.