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Recently, Eli Lilly announced plans to directly sell single dose vials of its weight loss drug Zepbound (tirzepatide) to consumers. The new prices for 2.5mg and 5.0mg doses are $99.75/vial and $137.25/vial, respectively, with corresponding monthly costs of $399 and $549, respectively, with a price reduction of over 50%. Novo Nordisk may adopt a similar strategy towards its Wegovy, with specific details to be revealed by its CEO during a Senate Health Committee hearing on September 24th.
Analysts have responded positively to Eli Lilly's move to lower Zepbound prices and offer the drug through its new self funded pharmacy component on its direct to consumer platform LillyDirect (launched in January this year). Joon Lee, an analyst at Truist Securities, believes that given the high demand for patients willing to purchase at their own expense, there is no reason why other GLP-1 manufacturers should not adopt similar strategies. Will Novo Nordisk emulate Lilly's approach?
If Novo Nordisk were to announce a significant reduction in prices for Wegovy, the company may hope to seize this opportunity in the coming weeks. Lars Fruergaard J ø rgensen, its CEO, has been scheduled to attend the meeting of the Senate Health Committee on September 24 to answer the question about the hearing's theme: "Why does the company charge Americans with diabetes and obesity an outrageous price of Ozempic and Wegovy".
01 Lilly's DTC Strategy

BMO Capital Markets analyst Evan Seigerman wrote in a report to investors that disposable small bottle doses have improved significant manufacturing limitations for automatic injectors. Since there is no need for mechanical manufacturing to produce the syringe pens required for automatic syringes, Lilly can accelerate the speed of providing medication to patients
With Eli Lilly now offering Zepbound at a discount of nearly 50%, Seigerman also believes that this is an effective challenge for compounding companies that can produce tirzepatide (or replicas) to address the shortage of available treatment methods previously provided directly through manufacturers.
Lee also agrees with this viewpoint. In our view, only offering cheaper low-dose vial forms instead of more expensive auto injectors is a smart strategy specifically targeting composite drug manufacturers, "he wrote in a report to investors, adding that Zepbound's discounts may be offset by not having to provide rebates to pharmacy benefit managers.
The decision of Lilly to lower the price of Zepbound has attracted people's attention in the Congress Hall. Bernie Sanders, chairman of the Senate Health Committee, issued a statement saying that he was "happy" that Lilly had taken a "modest step", but added that "millions of Americans still cannot afford the diabetes and diet pills they urgently need".
02 Wegovy's Price Pressure

Sanders launched an investigation on Novo Nordisk's Ozempic and Wegovy prices in April, and wrote in a letter to J ø rgensen the same month: "Pricing has turned drugs that can improve people's lives into luxury goods, while your company earned more than 12 billion dollars in profits last year." However, J ø rgensen told analysts on the second quarter financial report conference call that its diabetes and weight loss drugs "provide services for more patients than ever before", and "20 states have adopted Wegovy in Medicaid plans", Novo Nordisk is expanding this best-selling drug to low-income vulnerable groups Accessibility in.
The competition with Eli Lilly Zepbound has forced Novo Nordisk to lower the price of Wegovy, and this downward trend is expected to continue for the rest of this year. Doug Langa, Executive Vice President of Operations at Novo Nordisk North America, told analysts during an earlier Q2 earnings conference call that "as sales increase, prices will decrease, and we have already seen a decline in Wegovy prices in the first six months of 2024." Langa declined to provide specific details on pricing issues, but stated that "this is in line with expectations.
J ø rgensen told analysts during the same Q2 earnings conference call that the company is in a business environment of "pushing a large number of products to the market," rather than an environment where we feel we need to compete on price. However, Karsten Munk Knudsen, the Chief Financial Officer of Novo Nordisk, stated in a Bloomberg interview in May that "price declines are natural" as sales increase and competition intensifies.
Sanders believes that Novo Nordisk's prices are still "outrageously high". However, at the upcoming hearing in September, we can see J ø rgensen's specific response to this.