In a world where 1 in 8 people are obese, the demand for weight-loss solutions continues to climb. The growing concern over obesity has, however, sparked a massive trend in weight-loss drugs, generating vast economic opportunities for pharmaceutical companies. Pharmaceutical giants like Eli Lilly and Novo Nordisk have seen impressive gains in stock prices, but their struggle to secure patent protection for their profitable drugs is far from simple.
Brief History
Weight-loss drugs, collectively known as GLP-1 (Glucagon-like peptide-1) agonists, were initially developed to treat type 2 diabetes mellitus (T2DM) and later adapted for obesity treatment. Eli Lilly, an American pharmaceutical leader, pioneered in this field ever since it launched its commercial insulin product in 1923. In 2005, the company launched the first GLP-1 drug. Novo Nordisk, a Danish multinational pharmaceutical company, revolutionised the market with the launch of Ozempic in the U.S. in 2017, setting off a race for innovation in weight-loss therapeutics.
Eli Lilly and Novo Nordisk
Eli Lilly’s flagship weight-loss drugs, Zepbound and Mounjaro, have been instrumental in the company’s recent valuation surge – it is expected to become the world’s first $1 trillion drugmaker by market value. Novo Nordisk, likewise, is renowned for its products, such as Ozempic and Wegovy. The companies have been competitors since the initial stage of weight-loss drug production. However, nowadays, the surge of new competitors in the field is threatening the business of traditional weight-loss drug companies.
The Emergence of New Competitors
Initially, the primary challenge for weight-loss drug pioneers was ramping up production to meet overwhelming demand. This gave opportunities for healthcare start-ups to fill the gap, which resulted in American telehealth companies producing alternative compounding drugs for traditional weight-loss drugs. For example, Hims & Hers offers a copycat version of a GLP-1 for $199 per month compared with the $1,349 list price of Novo Nordisk’s Wegovy. The significantly lower price of the compounding drug allows those who cannot afford or are unwilling to pay for the mainstream drugs produced by Eli Lilly or Novo Nordisk to access the weight-loss treatment.
The FDA Regulation
The FDA stipulates that such copycat drugs can be made in bulk only when the original drugs are short in supply. This prevents start-ups from generating a significant profit by producing copycat drugs. However, Andrew Dudum, the co-founder of Hims & Hers, has already announced that it would continue to produce the copycat drug even after the shortage is resolved. This would negatively affect the sales and production of the original weight-loss drugs, as well as the overall quality of weight-loss medications, due to the lack of official state approval. Unlike generics, compounded versions of patented drugs do not have FDA approval. This is because, generally, compounded drugs are to treat the symptoms of allergies and alleviate supply shortages.
Eli Lilly’s Countermeasures
In the face of growing competition, Eli Lilly has lowered the price of Zepbound. Furthermore, the company is trying to prove the added benefit of tirzepatide (the raw ingredient used in Zepbound) for the treatment of weight-related conditions such as sleep apnoea. These efforts will pave the way for broader insurance coverage of weight-loss medications, a challenging goal due to their high costs. Studies have found that including weight-loss drugs for elderly Americans on the state-backed Medicare health insurance programme could cost the US government $35 billion over the next nine years. Additionally, Eli Lilly announced its intention to test its drugs on people who are not overweight but are at risk of gaining weight in the future, possibly expanding the market further.
Endless Lawsuits
Patent litigation in this sector shows no signs of slowing down. As of September 2024, Eli Lilly and Novo Nordisk had already launched legal proceedings against 65 confounders and medical centres related to the trademark of their weight-loss drugs. Moreover, on October 7, a compounding company sued the FDA for removing Eli Lilly’s weight-loss drugs from the shortage list. The removal means that healthcare start-ups like Hims & Hers can no longer sell compounded drugs in bulk, causing damage to their profits. The compounding companies denounced Eli Lilly for being “the company that is self-interested in monopolizing the market” and accused the FDA’s decision of being “arbitrary, capricious and contrary to the law.” Both Eli Lilly and the FDA declined to comment on the ongoing dispute.
Meanwhile, some lawsuits have been resolved through settlements. On October 7, Novo Nordisk and Viatris announced that they had agreed to settle a patent dispute related to Novo Nordisk’s Ozempic and Wegovy. Although the terms of the settlements are confidential, the long legal battle between Novo Nordisk and Viatris’s Mylan Pharmaceuticals seems to have reached its end.
The Future
The demand for weight-loss drugs will likely increase, and so will patent litigations. Eli Lilly and Novo Nordisk will continue to see a surge in their stock price, yet it will come with the cost. The increasing competitors will pose a continuous threat to the traditional weight-loss drug companies, and therefore, necessary countermeasures will need to be taken. The lack of adequate regulation around replica weight-loss drugs can tarnish the brand image of traditional weight-loss drugs, and even worse, undermine the health of those who are prescribed the drugs. This is not to say that traditional weight-loss drugs are side-effect-free. In fact, the severe side effects of Wegovy and Zepbound have been reported, which include rapid muscle loss. The improvement of the medicine itself and the careful distribution of the drugs will continue to be required.
Image by News Oresund via Wikimedia Commons