(Bloomberg) -- Novo Nordisk A/S is shipping more introductory doses of its blockbuster weight-loss drug Wegovy in the US as it grapples with supply constraints and competition from Eli Lilly & Co.

Wegovy sales more than doubled to 9.38 billion kroner ($1.35 billion) in the first quarter, but the number fell short of analysts’ estimates due to pricing pressure. In a sign of investors’ focus on the obesity medicine, the stock declined even though quarterly profit surged and the company raised its forecast.

Ramping up production is a key element of Novo’s strategy as it battles Lilly for supremacy in the weight-loss market. The Danish drugmaker is doubling its investment in manufacturing capacity this year to about $6.4 billion — a figure that doesn’t include the planned $11 billion acquisition of three factories originally owned by contract manufacturer Catalent Inc.

More than 25,000 patients are now starting on Wegovy each week in the US, Novo Chief Executive Officer Lars Fruergaard Jorgensen said Thursday. That’s up from about 5,000 in December. Another executive said earlier that the number had quadrupled to about 20,000, in a sign of how quickly Novo is moving to scale up supply for a drug that’s helped carve an entirely new market.

 

“Given the significant global demand, it’s not in the short or medium term that we’re going to meet full global demand,” Chief Financial Officer Karsten Munk Knudsen said in an interview. 

Demand for Wegovy and its sister medicine for diabetes, Ozempic, prompted the company to increase its forecast, saying sales could surge as much as 27% and operating profit by as much as 30% this year. 

What Bloomberg Intelligence Says:

Novo Nordisk’s 1Q outperformance and modest guidance raise is unlikely to distract attention from Wegovy’s 11% sales miss, which may be attributable to lower realized price and supply. We expect sales of the obesity drug to accelerate in 2H on improved supply with the top end of guidance.

— Michael Shah, BI pharma analyst

Novo shares fell as much as 3.6% in Copenhagen trading before recouping some of those losses. They have surged about 27% this year and almost doubled since the start of 2023.  

Price Questions

Wegovy and Ozempic’s cost has been a point of contention in the US since a Yale University study in March estimated that Ozempic could be profitably produced for less than $5 a month. The drug’s list price is $936, with Wegovy at $1,349. 

The Yale study didn’t take into account the cost of building production facilities, Jorgensen said in an interview with Bloomberg TV. “I’m actually quite disturbed by a number like that,” the CEO said. “I think it brings false hopes to patients that anyone can produce at that price.” 

Prices for Wegovy are declining as volumes increase, linked to breadth of insurance coverage as well as competition, CFO Knudsen said on a conference call. “That will also take place in the remainder of the year,” he said. 

Read this next: The Ozempic Effect: How a Weight Loss Wonder Drug Gobbled Up an Entire Economy

In an April 24 letter to Novo’s CEO, Senator Bernie Sanders said the Senate Committee on Health, Education, Labor and Pensions is investigating the drugs’ prices. 

About 80% of Wegovy patients in the US with commercial coverage for the drug are paying $25 or less per month, according to Novo.

The drugmaker will continue to impose some restrictions on access to the lower doses of Wegovy that are used as patients slowly ramp up on the drug. 

“We’re not putting a time limit on it,” Negelle Morris, a senior vice president, said in an interview. “We do expect that demand is going to continue to outstrip supply.” 

Read More: Lilly Raises 2024 Guidance as Zepbound Flies Off Shelves 

The idea behind restricting lower doses of the drug is to give patients confidence that once they progress to the higher ones — intended to be taken for long periods of time — they will be able to continue treatment. As of this week, the two highest doses of Wegovy are listed as available in a Food and Drug Administration database that tracks drug shortages. 

Eli Lilly also raised its outlook this week and predicted that supply and pricing for Zepbound, its competing drug, will improve this year. The market for obesity treatments may soar above $80 billion by 2030, according to Bloomberg Intelligence. 

Novo said it’s still the global leader in GLP-1 medicines with a market share of 55%. 

--With assistance from Madison Muller, Lisa Pham, Romaine Bostick and Katie Greifeld.

(Updates with CEO comment in the ninth paragraph)

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