Lilly Acquires Injectable Drug Manufacturing Facility to Address GLP-1 Capacity Constraints Amid Intensifying Rivalry with Novo Nordisk

Apr 27, 2024 12:54 CST Updated 12:54

Eli Lilly

Global Pharmaceutical R&D and Production Company

Nexus Pharmaceuticals

Specialty Drug Developer

"The GLP-1 Capacity Battle Between 'Weight Loss Drug Titans' Eli Lilly and Novo Nordisk Intensifies."

Eli Lilly Announces Acquisition of Injectable Drug Manufacturing Plant from Nexus PharmaceuticalsRecently, Eli Lilly announced that it has reached a definitive agreement with sterile drug manufacturer Nexus Pharmaceuticals to acquire an injectable drug manufacturing plant located in Pleasant Prairie, Wisconsin, USA. Eli Lilly believes that this acquisition will further expand its global manufacturing network for injectable products and support the increasing market demand for the company's related drugs. Eli Lilly estimates that the plant may begin production by the end of 2025.

Eli Lilly's investment in new production capacity comes as the demand for its GLP-1R/GIPR dual agonist, tirzepatide, is surging, drawing significant industry attention to the new injectable facility. However, a spokesperson for Eli Lilly declined to comment on whether the company’s popular drugs for treating obesity and diabetes would be manufactured at this plant. Notably, the new facility does not offer contract manufacturing services and is exclusively dedicated to handling Eli Lilly's manufacturing tasks.

In the view of the industry, the competition between Eli Lilly and Novo Nordisk in the blood sugar reduction and weight loss market has evolved into a capacity battle. The two pharmaceutical giants have been striving to build their own manufacturing networks to maintain a "relative advantage" over their competitors. In February this year, Novo Holdings, the parent company of Novo Nordisk, directly spent a huge sum of $16.5 billion to acquire CDMO giant Catalent, temporarily taking the lead in this capacity race. However, it now appears that Eli Lilly, unwilling to fall behind, is also seeking ways to catch up with its old rival at full speed.

Heavy Investment of $11 Billion to Boost Production Capacity

Eli Lilly or陷 “No Factory to Buy” Dilemma?

According to the financial report, the sales of Mounjaro, the hypoglycemic version of tirzepatide, reached $5.163 billion in 2023, a year-on-year increase of 970%. Zepbound, the weight-loss version of tirzepatide which was approved for marketing in the United States in November 2023, generated $176 million in revenue in less than two months. The better-than-expected market sales also led Eli Lilly to raise its revenue forecast for tirzepatide in 2024: $7.491 billion for Mounjaro and $2.362 billion for Zepbound.

Due to strong market demand, Eli Lilly anticipates that the supply of specific doses of tirzepatide will continue to experience occasional interruptions in the short term, impacting some volume growth. Currently, Mounjaro and Zepbound remain listed in the U.S. FDA's drug shortage database. Due to increasing demand, multiple formulations of these drugs will have limited availability until the second quarter of 2024, supporting Eli Lilly's forecast.

However, during the earnings call, Eli Lilly's Chief Financial Officer, Anat Ashkenazi, stated, "We are pursuing a range of internal and external projects, both large and small, to further expand our production capacity." The acquisition of the Pleasant Prairie plant from Nexus Pharmaceuticals, Inc. is evidently an important part of these initiatives by Eli Lilly.

It is reported that the construction of the factory started in 2019 and it began operations in 2021, with an investment of approximately 100 million US dollars. The facility covers an area of more than 84,000 square feet and includes manufacturing space, packaging capabilities, warehousing, as well as analytical, environmental, and microbiological testing. Designed for the production of a wide range of injectable drugs, the factory is equipped with advanced isolator technology, meeting the highest current Good Manufacturing Practice (CGMP) standards, and successfully passed the US FDA regulatory approval process in May 2023.

In fact, the newly acquired injectable facility is just the latest in a series of recent moves by Eli Lilly. Over the past few years, Eli Lilly has allocated approximately $11 billion to expand its manufacturing capacity in response to the competitive landscape for weight-loss drug production.

In May 2022, Eli Lilly and Company announced an investment of $2.1 billion to build two new manufacturing sites at the LEAP Innovation Park in Boone County, Indiana. The new sites will strengthen Eli Lilly's API and new therapy manufacturing network. In April 2023, Eli Lilly announced an additional investment of $1.6 billion to create 200 more new jobs at the two new sites in the innovation park, bringing the total committed investment to $3.7 billion.

In addition, Eli Lilly has invested $4 billion in building two factories in North Carolina, USA, and by the end of 2023, it had doubled the production of GLP-1 drugs. In January 2023, Eli Lilly announced an additional investment of $450 million to expand its factory at the Research Triangle Park in North Carolina, providing extra drug filling, device assembly, and packaging capacity for products including GLP-1 drugs.

In March 2023, Eli Lilly announced an additional investment of $500 million in its production facility in Limerick, Ireland, bringing the total investment in the facility to approximately $1 billion. In January 2022, Eli Lilly announced an investment of $446 million in the plant to expand the production of active pharmaceutical ingredients and monoclonal antibodies.

In April this year, Eli Lilly held a groundbreaking ceremony for a new factory in Alzey, western Germany. Eli Lilly revealed that the factory will mainly be used for producing injectable drugs and injection pens. It is expected to begin operations in the summer of this year and officially commence production in 2027. The products manufactured will be sold globally and will become its sixth production base in Europe. It is reported that Eli Lilly plans to invest $2.5 billion in this factory, which is also the largest investment in the pharmaceuticals industry since German reunification, aiming to help Eli Lilly address drug shortages, including GLP-1 drugs.

Despite Eli Lilly and Company's ongoing largest production expansion plan in its history, it will still take some time to increase the capacity of GLP-1 drugs. This has also prompted Eli Lilly to learn from its competitor Novo Nordisk, directly acquiring an injection factory with complete facilities to quickly fill the capacity gap.

However, while acquiring existing facilities may accelerate Eli Lilly's capacity expansion, Eli Lilly CEO Dave Ricks acknowledged that this approach faces certain challenges. "The reality is that there is simply not much built capacity available right now, as most of it is already being used to produce leading products in the GLP-1 field, at least on any scale, and the lead time for new capacity is three to four years."

This means that Eli Lilly, which is making bold investments in GLP-1 drug production capacity, may be falling into an awkward situation of "having no factories to buy."

How to capture the GLP-1 drug market more quickly? How to continue maintaining an ultra-high market value? These will become challenges that Eli Lilly and Company must face next.

Novo Nordisk Frequently Makes Big Moves

China Market Brings Expansion Schedule Forward

The successful commercialization of Zepbound has allowed Eli Lilly and Novo Nordisk, longtime rivals in the diabetes market, to engage in a new head-to-head competition in the weight-loss drug market. In fact, Novo Nordisk, with the first-mover advantage of semaglutide, began expanding its production capacity as early as 2017. Data shows that between 2022 and 2023, Novo Nordisk invested over 5 billion US dollars across all related manufacturing facilities, aggressively scaling up capacity to meet the growing market demand.

In June 2023, Novo Nordisk announced plans to invest 15.9 billion Danish kroner (approximately 2.3 billion US dollars) in expanding its existing API production facilities in Denmark. This investment will create 340 new jobs and also play a crucial role in advancing Novo Nordisk's late-stage clinical product portfolio in the future.

In November 2023, Novo Nordisk announced plans to invest more than 42 billion Danish kroner (approximately 6 billion US dollars) over the next few years to expand its existing production facilities in Kalundborg, Denmark, for the production of its current and future portfolio of serious chronic disease products. This investment will create additional capacity across the entire global value chain, from API manufacturing to packaging, with the majority being invested in API capacity. The construction project is expected to be completed in phases between the end of 2025 and 2029, and is anticipated to create 800 new jobs.

In the same month, Novo Nordisk announced plans to invest over 16 billion Danish kroner (approximately 2.3 billion US dollars) starting from 2023 to expand its existing production facility in Chartres, France. This investment aims to support the current and future portfolio of products in the severe chronic disease field. The investment will significantly increase the plant's capacity by adding sterile production and finished product manufacturing processes, as well as expanding the existing quality control laboratory. Novo Nordisk stated that this investment includes GLP-1 production capacity, which will enhance its ability to meet future demands for innovative products. The construction plan is scheduled to be gradually completed between 2026 and 2028.

Unlike Eli Lilly's focus on expanding capacity in Europe and the United States, Novo Nordisk has also set its sights on the Chinese market. In March this year, Novo Nordisk China announced that it would invest approximately 4 billion yuan in Tianjin for the expansion of sterile formulation production facilities, and held a groundbreaking ceremony for the expansion project, which is expected to be completed by 2027. This is not the first expansion of Novo Nordisk’s Tianjin plant; as early as the beginning of 2023, Novo Nordisk invested 1.18 billion yuan in the plant to expand its finished product workshop and introduce a pre-filled injection pen production line. In the industry's view, this prepares for the launch of its weight-loss drug in the Chinese market.

Notably, besides intensively expanding production capacity, Novo Nordisk is also adopting more diversified approaches to enhance its capacity deployment, with deepening cooperation with CDMOs being one of the key strategies. In August 2023, to meet the continuously growing market demand for the weight-loss version of semaglutide, Wegovy, Novo Nordisk reached a production partnership with contract manufacturer Thermo Fisher Scientific. According to reports, Thermo Fisher provides Novo Nordisk with semaglutide-filled pen production services through a plant in Greenville, North Carolina, operated by its CDMO subsidiary Patheon.

In February this year, Novo Nordisk made a major move by directly acquiring the production capacity of CDMO giant Catalent. Under the premise that Novo Nordisk's parent company, Novo Holdings, spent a huge sum of $16.5 billion to acquire Catalent, as part of this deal, Novo Nordisk will spend $11 billion to obtain three filling-finished product manufacturing plants under Catalent. These three plants, which specialize in sterile drug filling, are located in Anagni (Italy), Brussels (Belgium), and Bloomington (Indiana, USA). It is expected that starting from 2026, this acquisition will gradually increase Novo Nordisk’s filling capacity.

Industry insiders pointed out that, in response to patient demand, the rapid uptake of the two major GLP-1 drugs, semaglutide and tirzepatide, has far exceeded market expectations. This has left pharmaceutical giants Novo Nordisk and Eli Lilly struggling to handle such a scale of production capacity in a short period. However, the capacity issue for GLP-1 drugs is not insurmountable. The "GLP-1 dual leaders" are investing heavily to expand their production capacities, but construction cycles are still needed to achieve this, providing a valuable window of opportunity for later entrants to enter the market.

Editor: Zheng Miao