How to understand the sharp price drop of GLP-1 weight loss drugs? Goldman Sachs: Strategic "price-for-volume", Eli Lilly has the advantage, Novo Nordisk faces pressure.

How to understand the sharp price drop of GLP-1 weight loss drugs? Goldman Sachs: Strategic "price-for-volume", Eli Lilly has the advantage, Novo Nordisk faces pressure.

Recently, Eli Lilly and Novo Nordisk reached a major agreement with the U.S. government to significantly reduce the price of GLP-1 weight-loss drugs. Goldman Sachs believes this is essentially a strategic "price-for-volume" deal; although the price cuts were sharper than expected, the tremendous potential for increased sales brought by the opening of the Medicare channel will greatly offset pricing pressure.

According to a WallstreetCN article, last Thursday Trump announced a deal with Eli Lilly and Novo Nordisk to drastically slash prices for certain weight-loss drugs, including soon-to-be-released oral medications. Per the agreement announced last Thursday, starting in 2026, Medicare and Medicaid patients will be able to obtain GLP-1 drugs such as Eli Lilly’s Zepbound and Novo Nordisk’s Wegovy at a listed price of $245 per month, with Medicare patients’ out-of-pocket cost at just $50.

Regarding this agreement, on November 10, according to Chasewind Trading Desk, Goldman Sachs emphasized in a recent research report that this is not a simple price cut, but a carefully planned strategic "price-for-volume" move. By drastically reducing monthly charges, the deal successfully unlocks the previously uncertain market of tens of millions of Medicare and Medicaid patients, suggesting immense sales growth potential.

Goldman Sachs believes that although price reductions may pressure revenue in the short term, the surge in long-term sales will be an important offset, and therefore maintains its prediction for a total obesity market size (TAM) of about $95 billion by 2030.

However, in this deal, the winners and losers are already clear. Goldman Sachs points out explicitly that Eli Lilly holds a distinct advantage due to a stronger market share, quicker launch prospects for oral drugs, and a more proactive management posture. In contrast, Novo Nordisk faces more direct growth pressure and multiple headwinds.

Major Agreement Landed: Sharp Price Reduction, But Not Worst-Case Scenario

Goldman Sachs says the core of the agreement is a major adjustment of GLP-1 drug pricing, but it did not touch the bottom line most feared by the market. Specific price points include:

  • Medicare/Medicaid Channels: Obesity treatment is being included in Medicare for the first time, with prices capped at $245 per month and patient out-of-pocket payments no higher than $50. This applies to major drugs such as Ozempic, Wegovy, Mounjaro, and Zepbound.
  • TrumpRx.com Channel: Ozempic and Wegovy are priced at $350 per month, Zepbound and orforglipron (Lilly’s oral drug) at $346 per month. This price is expected to gradually decrease to $245 in the future.
  • Oral Drug Starter Dose: For Lilly’s orforglipron and Novo Nordisk’s oral Wegovy (if approved), the starting dose will be $149 per month, with high-dose prices rising to $399.

Goldman Sachs points out that while these prices are below previous model forecasts, they are far better than the deeply discounted “abyss prices” of $150-200 feared from IRA negotiations. This injects certainty into the market and sets a new benchmark for the future pricing strategies of the two giants.

"Price-for-Volume": Unlocking Tens of Millions of Government Patients, Market Size Expectations Unchanged

The real purpose of the price cut is to open new market doors. Previously, Goldman’s models assumed only a 50% probability of successful Medicare channel coverage. Now, this channel is fully unlocked. According to report data:

Novo Nordisk estimates the Medicare channel alone covers about 30 million obesity patients. Eli Lilly states the total potential patient pool for Medicare and Medicaid channels reaches 40 million.

Goldman Sachs believes that massive sales growth will significantly offset the effect of price decreases. Accordingly, the forecast for a global anti-obesity drug market TAM of about $95 billion by 2030 remains unchanged.

Additionally, the price cuts may bring two extra benefits: 1) improved patient compliance, since price is a key reason for stopping medication; 2) enhanced price stability, avoiding more dramatic future price wars.

Duopoly Dynamics Shifting: Eli Lilly's Edge, Novo Nordisk Under Pressure

Although the agreement consolidates Eli Lilly and Novo Nordisk's duopoly, making it harder for new entrants to challenge, the benefits from the deal are not equal between the two. Goldman Sachs is clearly bullish on Eli Lilly for the following reasons:

Market Share Advantages: Zepbound dominates in both reimbursement channels (60% vs. Wegovy’s 40%) and cash-pay channels (85% vs. Wegovy’s 15%), thus stands to gain more from volume growth.

More importantly, Eli Lilly has acquired a "priority review voucher," with its oral drug orforglipron expected to hit the market in Q1 2026, ahead of previous expectations for Q2 or Q3. Goldman estimates this could bring Eli Lilly at least $1 billion in incremental revenue in 2026.

For oral drug pricing, orforglipron’s starter dose is set at $149 per month, maintenance dose averages around $346, lower than Goldman’s previous forecast of $400. Analysts expect U.S. market share to stay at a favorable 60:40 in Lilly’s favor.

By contrast, Novo Nordisk faces much tougher challenges. Goldman Sachs states that in the press release, the company expects the new pricing to have a "low single-digit" impact on 2026 revenue, which is an extra pressure on top of already announced adverse factors.

Goldman points out Novo Nordisk already faces multiple headwinds: a 2-point drag from 2025 GTN effects, low single-digit impact from semaglutide generics overseas, and the risk that some states may halt Medicaid coverage.

Its analysts currently forecast Novo Nordisk's 2026 revenue growth at 4.4% (constant currency), but have not yet factored in the impact of this price reform. Worryingly, 2027 IRA price negotiations could bring additional pressure.

Goldman assumes IRA talks could discount semaglutide prices down to $200, representing a 43% reduction from the Medicare price of $350. Given that Eli Lilly is maintaining a fixed price of $245 throughout the agreement, this means semaglutide will face about an 18% price disadvantage compared to tirzepatide.

 

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