It was first intended as a treatment for diabetes only, but in recent years has become the hottest weight-loss drug. A drug substance called semaglutide has put Danish Novo Nordisk and its Ozempic and Wegovy in the spotlight.
But the diet giant's success story has encountered a number of challenges in the past year that are expected to persist going forward. Partly, this concerns increased competition, not least from American Eli Lilly, and partly pressure on prices. On top of that, the patent for semaglutide is expiring in several countries.
It's a cocktail, says Per Hansen, savings economist at Nordnet in Denmark.
Price pressure expected
In Europe and the U.S., it's taking longer, but in Canada the patent expired in January this year. In India, where there is a growing problem with overweight and obesity, the country's large pharmaceutical industry is getting ready to take up the fight for generic, cheaper versions of the best-selling drug when the patent expires in March. Novo Nordisk itself launched Ozempic in India last year, just like Eli Lilly, whose weight-loss drug is called Mounjaro.
"When you have a patent on a drug and the patent expires, there will be a lot of pressure on the price. It will be a major adjustment for a company if they don't manage to come up with a successor," says Mattias Arvidsson, head of unit at the Swedish Patent and Registration Office.
Analysts see a potential price war ahead that could lower the price of the drug by 90 percent in India, the world's most populous country, according to CNN. Several companies there are ready to start manufacturing generic versions, including Dr. Reddy's, which aims to launch its product in over 80 countries next year.
Industry rules
The company that manufactures generic copies after the patent has expired must do exactly the same basic work in terms of quality. But it doesn't cost as much and it's a less complicated process, says Dag Larsson at Lif, the trade association for research-based pharmaceutical companies.
How copies will affect Novo Nordisk is difficult to assess, and patent expiration is something that companies in the industry must constantly deal with.
These are simply the rules of the game. Since these are the business conditions in the long term, you have to constantly add new products to your portfolio in order to maintain growth, says Dag Larsson.
