GLP-1 Drug Market Expansion Fuels Rising Demand for Upstream CDMO Services

　　【Pharmaceutical Network Market Analysis】As the "Dual Leaders" in diabetes and weight loss, Novo Nordisk and Eli Lilly have successively released their Q1 2024 financial reports. According to Novo Nordisk’s disclosed data, total revenue for the first quarter reached DKK 65.349 billion (approximately USD 94.96 billion), with an operating profit of DKK 31.846 billion (approximately USD 46.28 billion), representing a year-on-year increase of 30%. Notably, the injectable diabetes drug Ozempic (semaglutide) generated sales of DKK 27.810 billion (approximately USD 40.41 billion), up 43% year-on-year; oral diabetes medication Rybelsus achieved sales of DKK 5.013 billion (approximately USD 7.28 billion), growing by 17%; while the weight-loss drug Wegovy saw its sales double to DKK 9.377 billion (approximately USD 13.63 billion). The combined revenue from the three semaglutide products amounted to DKK 42.2 billion (approximately USD 61.32 billion). Based on these strong results, Novo Nordisk announced an upward revision of its profit and sales outlook, projecting that its 2024 sales could increase by 19%-27%, with operating profit potentially rising by 22%-30%.
 

Eli Lilly's GLP-1 drug tirzepatide also showed very strong growth momentum, generating revenue of $2.324 billion in the first quarter of this year, a year-on-year increase of 308.8%. Among this, the sales of tirzepatide Zepbound (for weight loss indication), which was approved for marketing in November 2023, rapidly increased from $176 million in Q4 2023 to $517 million in Q1 2024. Based on this, Eli Lilly announced an increase of $2 billion in its 2024 revenue guidance, expecting the sales growth rate in 2024 to reach 26%-35%.
 

Currently, with the strong demand in the weight-loss drug market, even leading to supply shortages, Novo Nordisk and Eli Lilly, the two top companies, are preparing to expand production actively. In February 2024, Novo Nordisk announced plans to acquire three aseptic filling factories originally belonging to Catalent to increase the production capacity of semaglutide. The company expects its capital expenditure in 2024 to reach 45 billion Danish kroner, mostly for the construction of active pharmaceutical ingredient (API) production capacity. In April 2024, Eli Lilly announced plans to acquire a pharmaceutical plant from Nexus Pharmaceuticals, aiming to further expand its GLP-1 drug production network. Additionally, Eli Lilly is investing in several new plants, and its capital expenditure is expected to increase further in the coming years.
 

The market for GLP-1 drugs, represented by semaglutide and tirzepatide, is continuously expanding. With more pharmaceutical companies entering the field, the future market prospects are broad. According to a research report by Open Source Securities, as of the end of April 2024, seven new GLP-1 drugs have been approved for marketing in China, with five additional drugs in the new drug application stage; overseas, seven new drugs have been approved for marketing, with five drugs currently in Phase III clinical trials.
 

According to Frost & Sullivan's forecast, the market size of GLP-1 drugs in China is expected to reach 51.5 billion yuan by 2030. Against this backdrop, the industry anticipates development opportunities for upstream CDMOs, including the entire peptide industry chain.
 

Currently, many pharmaceutical outsourcing companies have expressed involvement in collaborations related to GLP-1 drugs. For instance, on the evening of April 25, Hybio Pharmaceutical announced that its wholly-owned subsidiary, Hybio Wuhan, had recently signed a "Product Supply Agreement" with DS3 RX LLC, which intends to purchase GLP-1 from Hybio Wuhan.Active Pharmaceutical IngredientsValued at approximately 22.4 million to 24 million US dollars, equivalent to about 162 million to 174 million Chinese yuan, with a delivery period of 12 months. Prior to this, the company had received multiple GLP-1 overseas orders. In September 2023, the company received an order for GLP-1 active pharmaceutical ingredients from an overseas client, valued at approximately 219 million Chinese yuan, and has been shipping the products in batches; in November 2023 and February 2024, the company successively received orders from the same overseas client for the export of Liraglutide Injection to the United States, with a total transaction amount equivalent to 175 million Chinese yuan, and is entitled to share in the product's profits.
 

At the same time, multiple companies are actively increasing their production capacity to enhance competitiveness. For example, a relevant responsible person from WuXi AppTec revealed at the company’s Q1 2024 earnings meeting that the demand for peptide drugs is strong, and the company plans to expand new peptide production capacity in Taixing. The investor relations activity record published by Asymchem on the evening of April 22 also shows that the company is accelerating the construction of commercial peptide production capacity to support the continuous expansion of its peptide commercial production outsourcing business. As of the disclosure date of the company’s 2023 annual report, the total solid-phase synthesis capacity was 10,250 liters, and it is expected to reach 14,250 liters by the end of June 2024 to meet customer demands for solid-phase peptide commercial production.
 

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