novo nordisk The Danish drugmaker announced on Monday that it is investing 432 million euros ($506 million) in its Irish facility to expand production capacity to manufacture the newly launched Wigovy tablets.
The news comes about two months after Novo launched its blockbuster weight loss drug Wegoby in pill form in the U.S. market. This is said to be one of the most powerful launches of all time.
“With the investment in the Athlon facility, Novo Nordisk is expanding its production capacity for oral products, which strengthens our ability to meet current and future demand outside the United States,” said Kasper Boker Meilwang, Novo Nordisk’s executive vice president of chemistry, manufacturing, controls and product supply.
This follows Novo Nordisk’s loss of market share. Eli Lillyand investors are doubting that its pipeline has enough promise to make it back. As a result, the stock price has fallen and now trades at about a quarter of its peak in mid-2024.
“This investment represents Novo Nordisk’s focus and bet on the oral space, an area where Novo has an advantage,” Henrik Hallengreen Laustsen, an analyst at Jüske Bank, told CNBC on Monday.
Secure Wegovy supply
Novo enjoys a first-mover advantage in the anti-obesity drug market, launching its GLP-1 drug semaglutide, sold as Ozempic and Wigovy, years before Lilly’s rival drugs.
But it misjudged the demand for weight loss jabs. With semaglutide in short supply, compounding pharmacies have been able to thrive by exploiting loopholes in U.S. regulations that allow them to legally manufacture patented drugs during the shortage.
Supply issues were subsequently resolved as Novo increased its manufacturing capacity. Still, pirates continue to sell cheap imitations of the drug, still weighing on Novo’s sales. The company is embroiled in multiple legal battles over intellectual property.
Novo has repeatedly said it has enough supply of Wigovy tablets to meet demand in the United States, the only market in which it has so far launched it.
Sydbank analyst Soren Lontoft Hansen said that even with the new investment in Ireland, Novo would have difficulty meeting global demand for its tablets.
Hansen said Novo’s announcement Monday about expanding manufacturing capacity reflects the company’s desire to launch the pill in other countries. It is currently under review by the European Medicines Agency and is expected to be approved by the end of the year.
“This also reflects a very successful launch in the U.S., and in fact, it’s probably the best new drug launch in history,” Hansen told CNBC.
According to Barclays analysts who are closely tracking Wegovy’s adoption, U.S. prescriptions for Wegovy tablets have outpaced the initial rollout of existing GLP-1 injections. Novo CEO Mike Dowdstar told CNBC in mid-February that 246,000 patients were taking Wigovy orally.
Novo Nordisk stock is lagging behind Eli Lilly stock.
Novo shares fell about 1.2% on Monday, hitting a 52-week low.
“Looking at the stock price reaction, this appears to be a big sell-off, but I actually think this shows confidence in Wegoby’s tablets and that they need more in terms of production capacity to meet potential future demand outside of the U.S.,” Hansen said.
“If we were to give up, we would not invest in a factory in Ireland,” CEO Mike Doosder said in February, Bloomberg reported.
The market will probably wait until Lilly launches a competing weight-loss drug, Folglipron, in the second quarter of this year before making a judgment on Wegobee’s future prospects.
Construction projects in Ireland have already begun and are expected to be completed in stages between 2027 and 2028, Novo said. This includes both capacity expansion and technology upgrades of existing facilities.
Laustsen said the site will likely focus on oral xenagamtide and amicletin, experimental drugs developed by Novo. “Planned to launch in 2029, it fits well with Novo’s strategic focus on increasing focus on oral opportunities in the obesity market,” he said.
