Weight Loss Drug Supply Issues: Novo Nordisk, Eli Lilly are Addressing the Challenges

Good afternoon! The focus is on Novo Nordisk and Eli Lilly once again as Wall Street searches for indications that they can overcome the obstacle they faced last year. Neither company has sufficient inventory to meet the relentless demand for their weight loss and diabetes medications.

Despite being a month into 2024, Eli Lilly and Novo Nordisk have not completely resolved their supply issues. However, they are making some progress.

Eli Lilly's Chief Financial Officer Anat Ashkenazi announced during an earnings call that the company aims to double its production capacity for injectable incretin drugs by the end of 2023. These drugs, such as Zepbound and Mounjaro, mimic hormones produced in the gut to suppress appetite and regulate blood sugar.

Eli Lilly aims to boost production capacity with equal urgency this year, with the most significant increases expected in the second half of 2024.

Eli Lilly anticipates its production of marketable incretin drug doses to be at least 1.5 times the amount produced in the second half of the previous year, according to Ashkenazi.

The company is planning to expand production with a new manufacturing facility in North Carolina, which will start producing incretin drugs by the end of 2024, with products available to ship in 2025, according to Ashkenazi.

Despite efforts to increase production, the company anticipates that demand for incretin drugs will exceed supply this year, according to Ashkenazi.

In the last week, both Eli Lilly and Novo Nordisk experienced positive supply developments in the weight loss drug market.

On Monday, Novo Holdings, the owner of approximately 77% of the voting shares in Novo Nordisk, announced a $16.5 billion acquisition of drug manufacturer Catalent.

Wegovy's fill-finish work, which involves filling and packaging syringes and injection pens, is primarily provided by Catalent, making it a crucial supplier to Novo Nordisk.

Novo Nordisk will acquire three manufacturing plants from Novo Holdings for $11 billion, with the purchase gradually increasing its filling capacity starting in 2026.

According to Yuri Khodjamirian, chief investment officer at Tema ETFs, the Catalent deals on Monday will likely increase supply, which is the main obstacle to this market's growth. Tema launched an ETF in November that focuses on companies that benefit from the popularity of weight loss drugs.

Additionally, the agreement allows Novo Nordisk to have greater control over the quality of Wegovy production at Catalent's facilities, as previously experienced issues with supply quality have been addressed.

According to Reuters, FDA inspection documents revealed that Catalent's factory in Brussels, which fills Wegovy injection pens, experienced several lapses in recent years and had to shut down twice.

Novo Nordisk aims to enhance its supply efforts with the deal.

Since May, supply shortages have forced Novo Nordisk to restrict the availability of lower-dose versions of its weight loss injection Wegovy in the U.S. However, last week, the Danish drugmaker announced that it had more than doubled its supply of these lower-dose versions in January compared to previous months.

What is the significance of lower doses in Wegovy treatment? It is because patients are advised to begin with small doses and gradually increase the size to minimize side effects such as nausea. As a result, more patients can start treatment with Wegovy by using lower "starter" doses.

Executives on the company's fourth-quarter earnings call Wednesday announced that they plan to gradually increase the overall supply of Wegovy throughout the rest of the year.

The latest in health-care technology

The brain as the next frontier

The implantable neurotechnology field is heating up.

Elon Musk's Neuralink implanted its brain-computer interface into a human patient for the first time last week. The recipient is reportedly recovering well, as per a post on Musk's social media site X. However, Neuralink did not disclose any further information publicly.

Several companies, including Synchron, Precision Neuroscience, Paradromics, and Blackrock Neurotech, have developed brain-computer interfaces (BCIs) that allow patients with paralysis to control external technologies using only their minds.

Musk's goal is to enable communication as fast as a speed typist or auctioneer, just like Stephen Hawking.

Neuralink's first in-human clinical trial, which began in the fall after receiving FDA approval in May, is a significant milestone for the company, as announced by Musk.

Before gaining regulatory approval, Neuralink must conduct additional trials to demonstrate the safety and effectiveness of its BCI technology.

Synchron, like other BCI companies such as Synchron, is working towards bringing products to market. On Thursday, Synchron announced it has acquired a minority equity stake in the German manufacturer Acquandas to help it ramp up production of its flagship BCI in preparation for commercial demand.

The company has delivered its stent-like BCI to the brain of six patients in the U.S. and four patients in Australia through their blood vessels.

Synchron CEO Tom Oxley stated in a CNBC interview that there are millions of people with paralysis who require this technology, and they are ready to produce it in large quantities.

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