Novo Nordisk sets aside $6bn to boost production capacity

Novo Nordisk sets aside $6bn to boost production capacity

Novo Nordisk is leaving nothing to chance when it comes to claiming a stake in the burgeoning market for diabetes and obesity therapies, announcing a plan to spend a whopping DKK 42 billion ($6 billion) to expand its manufacturing capacity.

The drugmaker said the investment at its main production site in Kalundborg, Denmark, will serve “the current and future product portfolio within serious chronic diseases.”

In the near term, that means its GLP-1 agonist-based medicines for diabetes and obesity, for which demand is massively outstripping supply, holding back what is already rapid sales growth.

Despite those constraints, in its third-quarter results update last week, Novo Nordisk reported that sales of diabetes therapy Ozempic (semaglutide) grew 53% to $9.4 billion in the first nine months of this year, while obesity drug Wegovy (also semaglutide) was up 481% to over $3 billion.

At the time, Novo Nordisk said it was predicting further strong growth, but was also expecting “continued periodic supply constraints and related drug shortage notifications” that would peg back growth in 2024 and possibly beyond. To try to mitigate shortages, the company has been restricting access to lower starting doses of Wegovy.

Most of the newly announced investment will go towards the construction of a new 170,000 sq. m. active pharmaceutical ingredient (API) manufacturing facility, but will be spent “across the entire global value chain from manufacturing of [API] to packaging,” said the company.

The new plant will boost capacity for GLP-1 products, but will also serve as a multi-product facility, allowing changes to production processes as required. Construction is expected to take place between 2025 and the end of 2029 and create around 800 new jobs when up and running, along with employing 3,000 external workers during the building phase.

“Our continued investment in global capacity demonstrates the belief we have in our current and future product portfolio and its relevance for people living with serious chronic diseases,” said Henrik Wulff, Novo Nordisk’s executive vice president for product supply, quality & IT.

The company is expecting sales of Ozempic and Wegovy to ramp up next year, although, the latter is now facing its first major competition with the approval earlier this week of Eli Lilly’s dual GLP-1/GIP agonist Zepbound (tirzepatide) at a 20% discount to Novo Nordisk’s brand.

The new spending comes after announcements of 40 billion DKK in production investments in the last two years, including spending on a new facility in Funen, Denmark, adding 1,100 positions to its headcount.