Novo Nordisk (NVO, Financial), a leading weight-loss drug manufacturer, has announced that the rapid growth of the U.S. compounding pharmacy sector is impacting the sales of its semaglutide-based products, Wegovy and Ozempic. The company is considering legal action against firms it believes are infringing on its intellectual property rights.
According to FDA regulations, U.S. compounding pharmacies were allowed to replicate Novo Nordisk's drugs due to a shortage. However, the FDA recently declared the shortage over and instructed pharmacies to cease sales of these replicas by May 22. This follows a similar removal of the shortage label for Eli Lilly's (LLY) weight-loss drug Zepbound in December.
Novo Nordisk CEO Lars Fruergaard Jørgensen mentioned that the company has ramped up supply to meet the high demand, leading to the removal of Wegovy from the shortage list. However, he noted that the compounding pharmacy industry's growth appears to have affected the 2025 prescription volume for Wegovy.
The legal dispute involves major pharmaceutical companies and the Outsourcing Facilities Association (OFA), which seeks to retain the right to produce these lucrative drugs. The OFA criticized the FDA's decision as “reckless and arbitrary,” claiming it deprives patients of essential treatments for serious conditions.
Amid high branded drug costs and previous shortages, demand for compounded weight-loss drugs surged, including from telehealth companies like Hims & Hers (HIMS). However, these products lack FDA approval, meaning their safety and efficacy are not reviewed before market entry.
Fruergaard Jørgensen highlighted that some compounded products contain “impurities or even banned substances” and stressed the importance of verifying the authenticity of semaglutide before use. The FBI had previously warned about counterfeit compounded drugs containing unknown mixtures without semaglutide.
With improved supply, Novo Nordisk is optimistic about patients returning to branded options like Wegovy and Ozempic. The company recently launched an online pharmacy offering Wegovy at less than half the original price to entice users back from cheaper compounded alternatives.
Despite challenges, including disappointing trial results and competitive pressures, Novo Nordisk is striving to reassure investors of its market leadership. The company posted better-than-expected fourth-quarter profits due to high demand for Wegovy, though it anticipates a slight sales slowdown by 2025. Following the annual shareholder meeting, Novo Nordisk's stock fell by 3.8%.
