World Health Organization's Essential Medicines List Inclusion Signals Shifting Dynamics for GLP-1 Drug Market
The World Health Organization (WHO) has added GLP-1 weight loss drugs to its essential medicines list, a decision expected to boost global access but also introduce potential pricing pressures and increased generic competition for leading pharmaceutical companies like Novo Nordisk and Eli Lilly.
Opening
The World Health Organization (WHO) has officially added GLP-1 weight loss drugs to its list of essential medicines, a move poised to significantly broaden access to these treatments globally, particularly in lower-income countries. This decision, announced recently, has elicited a mixed sentiment within the pharmaceutical sector as investors weigh the implications of potential future pricing pressures against increased market opportunities.
The Event in Detail
The WHO's 2025 update to its Essential Medicines List (EML) included GLP-1 receptor agonists like semaglutide (active ingredient in Ozempic) and tirzepatide (active ingredient in Mounjaro), along with Eli Lilly and Co.'s (LLY) older Trulicity and Novo Nordisk A/S's (NVO) Victoza. Crucially, the inclusion is specifically for type 2 diabetes patients who also present with cardiovascular disease, chronic kidney disease, or obesity. The WHO explicitly stated that GLP-1 drugs were not deemed essential for obesity as a standalone condition, emphasizing the strongest evidence of benefit in patients with multiple cardiometabolic conditions.
In addition to GLP-1s, the WHO also added Vertex Pharmaceuticals' (VRTX) Trikafta/Kaftrio (for cystic fibrosis) and Merck's (MRK) Keytruda (for certain cancers), signaling a broader strategy to enhance access to high-cost, life-saving medications. The EML now features 523 drugs for adults and 374 for children, highlighting treatments considered vital for functioning health systems.
Analysis of Market Reaction
The market reaction to the WHO's decision has been complex. While the potential for expanded global reach for GLP-1 drugs is evident, the WHO's concurrent emphasis on tackling the high prices of these medications and encouraging generic competition introduces significant headwinds for current branded drug manufacturers like Novo Nordisk and Eli Lilly. This raises concerns about potential future revenue pressure and profit margin erosion. The rationale provided by the WHO, particularly the statement from Dr. Lorenzo Moja, head of the WHO secretariat overseeing the list, underscores this challenge:
> "Rather than letting price be a disqualifying factor, the committee views inclusion in the essential medicines list as a potential catalyst for access."
This suggests a strategic intent to drive down costs, potentially through increased competition from generic drugmakers as patents expire.
Broader Context & Implications
The GLP-1 market, currently dominated by Novo Nordisk and Eli Lilly, is projected for significant growth, with the overall market expected to generate an additional $400 billion in U.S. revenue from 2025 to 2030, reaching a cumulative $470 billion by 2030. However, this growth is set against a backdrop of intensifying competitive pressures and looming patent expirations.
Eli Lilly has shown robust performance, with Mounjaro revenue for the second quarter of 2025 reported at $5.2 billion, up 68% year-over-year, and Zepbound growing 172% to $3.4 billion for the same period. Analysts project Mounjaro and Zepbound to generate substantial revenues of $36 billion and $25.5 billion, respectively, by 2030. By the end of 2024, GLP-1 products accounted for 48% of Eli Lilly's U.S. revenue.
In contrast, Novo Nordisk cut its 2025 revenue guidance to 8–14% growth from an earlier 13–21%, leading to a stock decline of over 20%. This reduction is attributed to increased competition, including from compounded GLP-1 drugs, and pipeline delays. Novo Nordisk's first-quarter 2025 Wegovy sales also saw a 13% drop from the previous quarter due to supply shortages, which reportedly pushed patients toward rivals. GLP-1 products comprised 82% of Novo Nordisk's U.S. revenue by the end of 2024.
The landscape for generic GLP-1 drugs is rapidly evolving. Teva Pharmaceuticals' generic liraglutide (Saxenda) received FDA approval in April 2025, marking a significant step. Key patent expirations are anticipated to facilitate this shift, with semaglutide's active ingredient expected to lose patent protection in certain markets in the near term. Specifically, Novo Nordisk's semaglutide patent is set to expire in China and India in 2026. This has spurred activity from numerous pharmaceutical companies globally; for instance, at least 15 Chinese pharmaceutical companies are developing generic versions, with 11 in final-stage clinical trials for launches between 2025 and 2027. Indian firms like Dr. Reddy's are planning entry into 87 markets with cost-effective versions, and Brazil's EMS S.A. has already submitted an FDA application for generic Ozempic/Wegovy in the U.S.
Analysts anticipate annual pricing declines of 10-15% by 2027 and beyond due to new entrants and generics. For example, Goldman Sachs analysts project potential price reductions of around 25% for semaglutide in China after generic entry. The entry of new competitors like Roche, Amgen, Pfizer, and AstraZeneca with next-generation obesity drugs as early as 2026 is also expected to intensify pricing pressure. Economic analyses suggest cost-based prices for GLP-1 agonists could range from $0.75 to $72.49 per month, significantly below current market prices, underscoring the potential for disruption by generic and biosimilar manufacturers such as Mylan and Cipla.
Looking Ahead
The WHO's decision marks a pivotal moment for the global pharmaceutical sector, particularly for companies operating in the GLP-1 space. While it promises expanded access to life-changing treatments, it simultaneously signals a new era of intense competition and pricing scrutiny. Investors will be closely monitoring patent expirations, regulatory approvals for generic versions, and the ongoing strategies of major pharmaceutical players to adapt to this evolving market. The balance between incentivizing therapeutic innovation and ensuring affordable public access will remain a critical theme, with potential impacts from global and national drug-pricing initiatives, including those in the United States by the Centers for Medicare & Medicaid Services (CMS). The long-term trajectory of the GLP-1 sector is still considered bullish, but success will hinge on companies' abilities to manage patent landscapes, scale manufacturing capacity, and potentially form strategic partnerships to navigate the new pricing environment.
