Lilly Invests RMB 1.5 Billion to Expand Suzhou Facility for Tirzepatide Production

Can capturing production capacity conquer the weight loss drug market?

On October 11, Eli Lilly China announced an investment of 1.5 billion yuan to upgrade the production capacity of its Suzhou plant, expand the production scale of tirzepatide, and support the manufacturing of future pipeline products. This investment is also a key component of Eli Lilly's global capacity enhancement plan.The announcement stated that the expanded Suzhou factory will balance the dual needs of exporting to the European market and supplying drugs domestically in China. As of this increase, Eli Lilly's planned cumulative investment in Suzhou has approached 15 billion yuan, demonstrating its significant commitment to the Chinese market.

In March this year, Novo Nordisk announced an investment of approximately 4 billion yuan to expand its Tianjin factory, launching a sterile formulation expansion project. Just one year prior to this expansion project, Novo Nordisk had already invested 1.18 billion yuan to initiate the expansion of the finished product workshop and introduce a pre-filled injection pen production line.

Behind the continuous increase in production capacity is the consecutive approval in China of long-term weight management indications for semaglutide and tirzepatide.In May this year, Eli Lilly's GLP-1/GIP dual agonist tirzepatide was approved for marketing in China for the treatment of type 2 diabetes, with the weight loss indication approved in July. The main competitor, Novo Nordisk's semaglutide, received approval for its type 2 diabetes indication in January, and the weight loss indication was approved in June. In comparison, semaglutide has already swept the globe in 2023, boasting better brand influence and public recognition. Meanwhile, Eli Lilly has sounded the starting horn with a head-to-head comparative trial between tirzepatide and semaglutide.

At the same time, this is also an echo of the ongoing global warning about weight-loss drug production capacity.In the market aspect, whoever secures production capacity and the supply chain will have the foundation to capture China's ultra-large market. After all, the 2023 global capacity shortage of semaglutide and the 2024 inclusion of tirzepatide on the drug shortage list are still fresh in memory. Under fierce competition, can Novo Nordisk and Eli Lilly, which have successively become the world's top pharmaceutical enterprises by market value, create new market value miracles?

According to statistics, since 2020, Eli Lilly and Company has expanded the global production capacity of injectable incretin-based drugs through various means, including building and acquiring facilities in the United States, Ireland, Germany, and other locations. In April this year, Eli Lilly acquired an injectable drug production facility owned by Nexus Pharmaceuticals in Wisconsin. In May, Eli Lilly announced its largest production capacity investment in its 150-year history: an additional $5.3 billion to expand its plant in Indiana, aimed at increasing the output of the active pharmaceutical ingredient (API) for tirzepatide.

So far, Eli Lilly's continuous investment and expansion have proven to be highly effective. Since 2022, the global production capacity of incretin-based injectable drugs for type 2 diabetes and obesity treatment by Eli Lilly has doubled. On October 3, the FDA announced that the shortage of tirzepatide injection had been resolved and removed it from the drug shortage list.

In terms of sales, in 2024H1, the sales of Eli Lilly's tirzepatide reached 6.656 billion US dollars, increasing by 329% year-on-year.

After gradually resolving capacity and supply chain issues, Eli Lilly and Company has "changed its leadership" at a critical juncture in the Chinese market.On October 9, Eli Lilly China announced that Qiong Yan has been appointed as the Vice President of the Diabetes Products Division. She will be responsible for the growth of Eli Lilly's key product tirzepatide and its metabolic series in China, reporting directly to Huzur Devletsah, President of Eli Lilly China. Prior to joining Eli Lilly, Qiong Yan held positions at AstraZeneca, Novartis, and Menarini, where she served as Senior Vice President of the Oncology Therapeutic Area at Novartis, leading her team to achieve breakthrough growth for blockbuster drugs such as "Entresto," "Cosentyx," and "Kisqali."

For semaglutide, which has been approved globally for a longer time and is considered to have the potential to be the "next-generation drug king," the issue of production capacity is obviously more urgent.

The shortage of Semaglutide, Ozempic (hypoglycemic formulation), and Wegovy (weight-loss formulation) persisted throughout its 2023 global market, even driving up sales of its earlier weight-loss drug Liraglutide (Saxenda), which remained in a long-term supply-demand imbalance. In response, Novo Nordisk established five global production bases in Denmark, the United States, France, Brazil, and China, with nearly 20,000 employees in the manufacturing department.

Even amid a global shortage, semaglutide achieved the "miracle" of surpassing the $10 billion mark in sales. In 2022, semaglutide's sales reached $10.9 billion, making it the first GLP-1 drug to break through the $10 billion barrier globally. Novo Nordisk also became the highest-valued publicly traded company in Europe, with its stock price surging fourfold, surpassing the GDP scale of Denmark, where its headquarters are located. In 2023, the combined sales of three semaglutide products totaled $21.157 billion, with Wegovy, the weight-loss injection, reaching approximately $4.54 billion in sales, representing a substantial year-on-year increase of 420%; net profit was $12.1 billion, up 52% year-on-year.

Since the first approval of semaglutide in 2017, Novo Nordisk has been expanding its production capacity. From 2021 to 2022, Novo Nordisk invested approximately 40 billion Danish kroner (about 42 billion yuan) in production in Denmark. According to incomplete statistics, in the second half of 2023, Novo Nordisk successively invested 59.2 billion Danish kroner (approximately 77.662 billion yuan) to expand the production capacity of semaglutide. In the Chinese market, in 2023, Novo Nordisk completed an expansion investment of 1.18 billion yuan in its Tianjin plant; and in 2024, it invested approximately 4 billion yuan to expand the sterile formulation production line.

After continuous capacity expansion, in the first half of 2024, Novo Nordisk's semaglutide sales reached $12.9 billion, a year-on-year increase of 43%.

Supply issues are being steadily resolved, but new competition has already begun.

Novo Nordisk broke through firstDifferentiation of Dosage Forms: As early as 2019, oral semaglutide (Rybelsus) was approved by the FDA for marketing, becoming the world's first oral GLP-1RA for glycemic control indications.

Secondly, Novo NordiskExpanded multiple new indications for Semaglutide, including chronic kidney disease (CKD), neurodegenerative diseases (Alzheimer's disease), and non-alcoholic steatohepatitis (NASH). Among these, the fastest-progressing area in the prevention and treatment of heart failure received FDA approval for a new indication in March 2024 – to reduce the risk of cardiovascular death, heart attack, and stroke in adults with cardiovascular disease and obesity or overweight.

Eli Lilly and Company was not to be outdone. In June 2024, Eli Lilly and Company announced at the European Association for the Study of the Liver (EASL) annual meeting the use of tirzepatide forPositive Results from Phase II Clinical Trial for Treating Metabolic Dysfunction-Associated Steatohepatitis (MASH) PatientsFollowing this news, Eli Lilly's stock price surged 12.7% the next day, with its market value surpassing $800 billion, making it the new "world's most valuable pharmaceutical company."

At the same time, Eli Lilly and Novo Nordisk are also facing "undercutting" from multiple Chinese pharmaceutical companies in the Chinese market.In terms of single-target GLP-1 drugs, Lizhu Group, Hanmi Pharmaceutical, CSPC, and Huadong Medicine's Semaglutide have successively been approved for clinical trials; regarding GLP-1/GIP dual-target agonists, Hengrui Medicine's self-developed HRS9531 has published Phase II clinical research data on its efficacy and safety in type 2 diabetes patients. In the global market, MNCs such as AstraZeneca, Johnson & Johnson, Pfizer, and Roche have also entered the GLP-1 market.

"Eli Lilly and Novo Nordisk, the 'early comers,' are expanding their horizons towardsNext-Generation Weight Loss Drug Development。

Novo Nordisk has developed cagrilintide, the first long-acting amylin analogue investigated for weight management, and has also created a combination formulation with semaglutide named CagriSema.In clinical trials, CagriSema demonstrated superior weight loss and glucose-lowering effects compared to its individual components.Phase I data show that using 4.8 mg of CagriSema for 20 weeks can lead to a 17.1% weight loss. A head-to-head Phase III clinical trial of CagriSema versus tirzepatide has been initiated. In China, CagriSema has received tacit approval from the CDE for clinical trials as a Class 1 new drug and is intended for use as an adjunctive treatment in weight management for patients with obesity or overweight.

Eli Lilly and Company has successively acquired several weight-loss drug and related indication companies and pipelines, such as Versanis and KeyBioscience.Taking KeyBioscience as an example, the two parties will develop pipelines related to dual amylin and calcitonin receptor agonists (DACRA), with indications including weight loss and alleviating osteoarthritis (obesity-related complications) pain, among others.