The $150B Battle: Lilly's Zepbound and Novo Nordisk's Wegovy Vie for Market Supremacy in the US

As Eli Lilly's (LLY.US) weight-loss drug Zepbound and Novo Nordisk's (NVO.US) Wegovy engage in a fierce competition in the US market, the most pressing and effective strategy currently focuses on resolving supply chain bottlenecks. As Eli Lilly continues to ramp up its production capacity to narrow the gap with Novo Nordisk, these two industry giants are likely to achieve a balanced market share distribution in the US, the world's largest weight-loss drug market.

According to authoritative data, in the vast stage of the US weight-loss drug market, due to supply shortages, doctors have no choice but to prescribe based on the availability of the drugs. According to an IQVIA analyst report, since the launch of Zepbound last December, Eli Lilly has quickly captured around 40% of the market share, with weekly prescriptions reaching 130,000 as of July 19th, while Wegovy's weekly prescriptions were 200,000 during the same period.

It is worth noting that independent clinical trial data has revealed that Zepbound slightly outperforms Wegovy in terms of average weight loss, a advantage that has prompted some patients to switch to Eli Lilly's treatment plan. However, both parties are facing the challenge of being unable to fully meet the growing market demand, as neither company can adequately supply this once-weekly injectable weight-loss drug. In view of this, five American obesity specialists have revealed to the media that they will flexibly adjust their prescriptions based on the availability of the drugs, even if it means patients may need to switch between the two drugs to ensure continuity and effectiveness of the treatment.

Novo Nordisk has clearly stated on its official website that while the company is doing its utmost to support patients who wish to use Wegovy, the overall demand continues to exceed supply capacity, and some patients may still struggle to obtain a complete Wegovy prescription.

Eli Lilly's CEO recently stated that the shortage of the company's weight-loss drug will be "quickly" alleviated. Last Friday, the US Food and Drug Administration (FDA) updated the availability information for Zepbound, but has not yet removed it from the shortage list, and stated that it is working closely with Eli Lilly to ensure the stability of the supply.

As Eli Lilly and Novo Nordisk are about to release their quarterly results, the market and investors will closely monitor the performance of the two companies on the supply side. Analysts generally predict that the new weight-loss drug market will expand to $150 billion annually by the early 2030s. To this end, both companies have announced that they will invest billions of dollars in expanding and building new factories, as well as deepening their collaboration with contract drug manufacturers, in an effort to significantly increase their production capacity.

Furthermore, the two companies are also actively expanding into international markets. Eli Lilly has already launched its drug in the UK, Germany, Saudi Arabia, and the United Arab Emirates, while Novo Nordisk has entered the markets of Australia, Canada, and Spain. However, the US market, with its large population of overweight and obese adults (over 70%), is still seen as the most profitable market. In this context, Eli Lilly is expected to catch up with Novo Nordisk and achieve a balanced competitive landscape in the US market.

Thornburg Investment Management, a Novo Nordisk shareholder institution, said that for these two companies, the key driver of current performance is the resolution of supply issues, not market demand. FDA website data shows that the three lowest dose formulations of Wegovy are still in shortage. Since the second quarter of this year, Novo Nordisk has provided an average of nearly 170,000 Wegovy prescriptions per week to the US market, while Eli Lilly's similar drug has an average of slightly less than 100,000 prescriptions.

Analysts generally believe that as Eli Lilly's production capacity continues to improve and its gap with Novo Nordisk narrows, the two companies are likely to achieve a balanced market share distribution in the US market by the end of 2024. This balanced situation is expected to continue until the supply problem is fundamentally resolved, at which point Zepbound may give Eli Lilly an advantage in market share due to its greater market demand.

Meanwhile, market experts also point out that if pharmaceutical companies can develop more efficient or convenient weight-loss drugs, such as oral formulations with effects comparable to injections, the existing market landscape may undergo a new transformation. Dr. Robert Kushner of the Feinberg School of Medicine at Northwestern University in Chicago observed that some patients tend to choose Zepbound because they have learned through the internet that the drug may have better weight-loss effects. He emphasized, "This information is gradually spreading. But when I communicate with patients and explain the supply constraints of the two drugs, they quickly realize that the final choice will depend on which drug they can obtain, not a simple comparison of superiority."