Key Takeaways:
Lower-cost oral versions of GLP-1 weight-loss drugs from Novo Nordisk and Eli Lilly are capturing patients from unregulated compounding pharmacies, with prices for both pills starting at $149 a month.
"I have patients increasingly coming to me saying, 'I hear it's not as expensive to get the pharmaceutical-grade branded version, can we switch over?'" said Dr. Michael Weintraub, an endocrinologist at NYU Langone, who was interviewed by Reuters.
The $149 monthly price for Novo Nordisk’s Wegovy pill and Eli Lilly’s Foundayo undercuts the starting prices for their own injectable versions, which begin at $199 and $299, respectively. While injectables deliver weight loss of 15-20 percent, trials showed oral Wegovy and Foundayo achieved about 14 percent and 11 percent, respectively.
The move to oral options expands the total addressable market for the two pharma giants, though insurance coverage remains a significant hurdle for many patients. The trend directly benefits platforms like GoodRx, which saw its Pharma Direct revenue jump 82 percent year-over-year in the first quarter, partly by facilitating access to these new pills.
Doctors report that Novo Nordisk's Wegovy pill is benefiting from the brand recognition of its injectable predecessor and established data showing heart benefits. However, some patients are opting for Eli Lilly's Foundayo due to its convenience, as it does not require being taken on an empty stomach. Citi analysts project an eventual even split between the two pills.
The shift provides a boost to the drugmakers, who have long complained about compounded versions of their products. For investors, Eli Lilly (LLY) remains the market leader, though its stock trades at a rich 35x price-to-earnings multiple. Novo Nordisk (NVO), trading at a more modest 10x P/E, is viewed by some as a turnaround opportunity, despite its stock being down 45% from its 52-week high.
The successful rollout of these lower-cost pills reinforces the market dominance of Eli Lilly and Novo Nordisk in the lucrative obesity drug market. Investors will be watching upcoming quarterly earnings from both companies for specific sales figures on the new oral therapies to gauge their impact on revenue and margins.
This article is for informational purposes only and does not constitute investment advice.
