Novo Nordisk Invests $500 Million Daily to Ramp Up Semaglutide Production Amid Global GLP-1 Drug Boom

The Weight-Loss Drug War Is Imminent.

Novo Nordisk Announces Over DKK 16 Billion (Approx. RMB 16.8 Billion) Investment Starting in 2023 to Expand Existing Production Facility in Chartres, France

In November, following the approval of Eli Lilly’s dual GLP-1R/GIPR agonist tirzepatide for weight management, Novo Nordisk made a significant strategic move by reducing liraglutide production to ramp up semaglutide output.Since mid-June this year, Novo Nordisk has invested a total of DKK 59.2 billion (approximately RMB 77.662 billion) to expand the production capacity of semaglutide. This translates to a planned daily expenditure of over RMB 500 million.

As of the end of July this year, a total of eight novel single-target GLP-1 receptor agonists have been approved for marketing worldwide. Among them, only Novo Nordisk’s liraglutide and semaglutide have received approval for weight management indications. In particular, due to the limited supply of Wegovy, semaglutide’s product approved for weight loss, many patients with obesity have turned to Ozempic, its counterpart approved for diabetes, as an alternative. This has led to drug shortages for patients with diabetes, forcing Novo Nordisk to implement various restrictive measures to prioritize drug supply for diabetic patients.

Novo Nordisk’s announcement indicates that shortages of the two drugs will intensify for the remainder of this year. Intermittent shortages of Ozempic are expected to persist through 2024, although the overall supply situation is projected to improve in the first quarter of next year. Meanwhile, Novo Nordisk stated that it would restrict the supply of the starting dose (0.25 mg) of Ozempic to curb initiation among new patients. During this period, the European Medicines Agency (EMA) also advised physicians to “limit” prescriptions for new users.

Novo Nordisk operates five strategic production sites globally, located in Denmark, the United States, France, Brazil, and China, with nearly 20,000 employees in its manufacturing division. As semaglutide experiences a global surge in demand, the issue of capacity shortage has become increasingly pronounced.

Since the initial approval of semaglutide in 2017, Novo Nordisk has been expanding its production capacity. Over the past two years, the company has invested approximately DKK 40 billion (around RMB 42 billion) in manufacturing facilities in Denmark. This year, to further address capacity constraints, Novo Nordisk has taken frequent measures to expand semaglutide production.

On June 12, Novo Nordisk announced a plan to invest DKK 15.9 billion (approximately RMB 16.697 billion) in expanding its existing active pharmaceutical ingredient (API) production facilities in Denmark, so as to enhance the company’s capacity to meet future market demand and lay the groundwork for its future product portfolio in the field of serious chronic diseases.

On November 10, Novo Nordisk announced again that it plans to invest more than DKK 42 billion (approximately RMB 44.1 billion) to expand its facilities in Denmark for the production of its current and future portfolio of products for serious chronic diseases. This investment will enhance its capacity to meet future market demand, including for GLP-1 products.

Novo Nordisk has once again announced an investment of over DKK 16 billion (approximately RMB 16.8 billion) to expand its existing production facilities in Chartres, France, for pharmaceutical products related to serious chronic diseases. The associated construction projects are scheduled for completion between 2026 and 2028, at which time production capacity for a range of products, including several GLP-1 therapies, will be increased.

However, according to the announcement, these construction projects will not be completed until 2028 at the earliest. As this long-term solution cannot address immediate needs, Novo Nordisk must seek alternative ways to supplement its production capacity. The company also explicitly stated in its first-quarter financial report that it will add two new CMO production lines this year.

Notably, amid such severe capacity shortages, Novo Nordisk recently announced that it would provide its Danish employees with free access to Wegovy. As long as a physician prescribes the medication, Novo Nordisk will cover the full cost, requiring employees only to pay the applicable taxes.

In the 20th century, Eli Lilly was the dominant player in the insulin market. However, entering the 21st century, it faced challenges from emerging competitors such as Novo Nordisk and Sanofi, resulting in a shared dominance of the insulin market. The rivalry with Novo Nordisk has extended beyond the diabetes sector into the weight-loss drug market.

The Legendary History of GLP-1: From Eli Lilly and Amylin’s Joint Development of Exenatide, the World’s First GLP-1 Receptor AgonistThe legendary history of GLP-1 began with the joint development by Eli Lilly and Amylin of exenatide, the world’s first GLP-1 receptor agonist, which received FDA approval for marketing in 2005. Although it initially performed well in the market, repeated FDA warnings due to side effects ultimately led to its acquisition by AstraZeneca.

In 2010, Novo Nordisk’s liraglutide received marketing approval, securing its dominance in the GLP-1 therapeutic arena and initiating a fateful rivalry with Eli Lilly.

Four years later, the weight-loss indication for liraglutide was approved, with Novo Nordisk taking the lead in kicking off competition in the GLP-1 weight-loss sector. In the same year, Eli Lilly launched dulaglutide, and in 2018, it surpassed liraglutide with $3.2 billion in revenue, winning the first round.

However, in 2017, Novo Nordisk seemed to gain an unstoppable momentum. Semaglutide, an improved version based on liraglutide, was not only approved for market launch but also outperformed Eli Lilly’s dulaglutide in head-to-head trials assessing glycemic control and weight loss efficacy. Since then, Novo Nordisk has pulled far ahead of its competitors, securing approval for oral semaglutide in 2019 and for the weight management indication in 2021.

Last year, semaglutide generated $10.9 billion in sales, becoming the first GLP-1 medication to surpass the $10 billion mark globally. Financial reports for the third quarter of this year showed that sales of the weight-loss drug Wegovy reached $1.36 billion, a staggering 734% increase from the same period last year. The robust sales of its weight-loss medications have propelled Novo Nordisk’s market capitalization past that of the French luxury goods conglomerate LVMH, making it the most valuable publicly listed company in Europe. Since 2018, Novo Nordisk’s stock price has more than quadrupled, with its market cap even exceeding the entire GDP of Denmark, where its headquarters is located.

Eli Lilly is certainly not conceding defeat. In 2022, Eli Lilly’s dual GLP-1R/GIPR agonist tirzepatide was approved, achieving $483 million in sales within less than nine months of its market launch. In the first three quarters of 2023, it generated $2.96 billion in revenue, representing a year-over-year increase of 1,354%.

In April this year, Eli Lilly initiated a Phase III clinical trial comparing tirzepatide with semaglutide for the weight-loss indication, and in September, it launched a head-to-head Phase III study of its oral GLP-1 drug Orforglipron against oral semaglutide, directly engaging in a showdown with Novo Nordisk.

As the world’s first approved dual GLP-1R/GIPR agonist, tirzepatide appears to outperform semaglutide in weight loss efficacy. According to the Phase III SURMOUNT-3 trial results released by Eli Lilly in October, non-diabetic participants with obesity or overweight who received tirzepatide for 72 weeks following a 12-week intensive lifestyle intervention (including a low-calorie diet, exercise, and medical counseling) achieved an average weight reduction of 26.6% (29.2 kg) over the total 84-week period, setting a new record for pharmacological weight loss. In contrast, the placebo group experienced only a 3.8% (4.1 kg) weight reduction.

Based on the results of a previous global, randomized, double-blind Phase III trial (the OASIS 1 trial) conducted by Novo Nordisk, patients in the semaglutide group experienced a mean weight reduction of 15.1% from baseline at 68 weeks, compared with only 2.4% in the placebo group.

This November, Eli Lilly’s tirzepatide received approval for weight-loss indications, ushering these long-standing rivals into a new arena.