Novo Nordisk plunged 8%; its new weight-loss pill was "copied" as soon as it hit the market, with telemedicine company Hims launching a $49 generic version.
Just as Novo Nordisk’s newly launched weight loss pill was trying to find its footing, it has been hit by an unexpected market challenge.
On Thursday, February 5th, Novo Nordisk’s stock plunged sharply, after telehealth company Hims & Hers Health introduced a generic version of Novo Nordisk’s Wegovy weight loss pill, pricing it at just $49 for the first month, and $99 per month thereafter—far below Novo Nordisk’s branded drug, which starts at $149 for the first month.
Novo Nordisk had hoped to reverse its fortunes with the new product, but the rapid rollout of a low-cost generic by the telehealth company has quickly disrupted the market, sparking heated debate on pharmaceutical patent protection and regulatory frameworks.
Novo Nordisk issued a statement declaring Hims’ move to be “illegal mass compounding, posing significant risk to patients.” The company stated it will take legal and regulatory action to protect patients, its intellectual property, and the integrity of the U.S. drug approval framework.
Following this news, Novo Nordisk’s ADR shares dropped over 8% on Thursday, and rival Eli Lilly also fell by 7.1%.
Telehealth Companies Targeting the Low-Price Market
Hims’ generic pill poses a threat to Novo Nordisk’s product.
According to Reuters, the generic uses a “different formulation and delivery system.” Hims spokesperson Abby Reisinger stated:
The compounded semaglutide tablets offered today are not an essential replica of Wegovy.
Hims defended its product on social platform X, saying this is not the first time pharma companies have criticized their business as “dangerous, illegal, or harmful to the market.” The company said:
This narrative is predictable, outdated, and false.
Hims’ stock surged up to 14% in early trading Thursday, then steadily fell, closing down 3.7%. The company previously seized the opportunity to sell low-cost generics during widespread shortages of Eli Lilly’s and Novo Nordisk’s weight loss injections.
Although the shortages have now ended and telehealth companies were expected to stop selling generics, they have managed to tweak dosages or add ingredients so that their products are seen as sufficiently different from the branded drugs.
Core Technology Dispute Becomes the Focus
The main disagreement centers on drug formulation technology.
Novo Nordisk’s pill uses proprietary technology to protect the active ingredient semaglutide from degradation by stomach acid, aiding its absorption. Novo Nordisk CEO Mike Doustdar stated during a Thursday analyst call that without this protective technology, “it simply doesn’t work—it just doesn’t work.”
Doustdar said:
If consumers switch to an alternative, in my view, it’s wasting $49, because your intestinal enzymes will basically clear it out—it won’t get into the bloodstream.
Hims asserts that its pill also uses a formulation to protect the active ingredient from destruction during digestion.
The two companies have previously briefly worked together. Last year, Hims and Novo Nordisk partnered to offer discounted weight loss injections, but Novo Nordisk abruptly ended the partnership in less than two months, accusing Hims of “deceptive marketing” in selling Wegovy generics.
New Product Launch Setback Impacts Growth Expectations
The controversy has cast a shadow over what was otherwise a strong product launch for Novo Nordisk.
According to Mizuho Bank healthcare specialist Jared Holz, the pill is projected to generate $1.3 to $1.35 billion in revenue its first year.
Novo Nordisk reports that over 170,000 patients have started taking the drug in the four weeks since its January launch. Analysts previously hailed it as one of the most successful recent drug launches.
Novo Nordisk is gradually losing its edge in the fiercely competitive obesity market, facing not only Eli Lilly but also telehealth companies like Hims selling generics.
Analysts expect other new weight loss products to become targets for generics as well, including a pill Eli Lilly is developing, which the company says may be approved by regulators as soon as April.
Novo Nordisk shares this week are on track for their biggest weekly drop since August last year, and this sudden challenge from generics has further heightened investor concerns about its market position.
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