As pharmaceutical giants Novo Nordisk and Eli Lilly witness a surge in the sales of their renowned diabetes and weight management medications, the emergence of more affordable generic versions in certain international markets is posing a significant challenge to their pricing strategies and market dominance.

Since the U.S. approval of Novo Nordisk's flagship diabetes therapy, Ozempic, in 2017, regulatory bodies have granted approval to 22 medications containing its key component in countries such as Bangladesh, Laos, Russia, and Paraguay, alongside seven copies of Eli Lilly's competing drugs in Bangladesh, according to an extensive Reuters analysis.

The patented ingredient semaglutide in Ozempic is also a cornerstone in Novo Nordisk's highly sought-after obesity treatment, Wegovy, and its diabetes medication, Rybelsus. Similarly, Eli Lilly's tirzepatide is utilized in their products Mounjaro and Zepbound. In the current year alone, at least seven new products containing semaglutide have received marketing approval in Laos and Russia, as per public records of licensed pharmaceuticals, statements from regulatory officials, details on two authorized drugs in Paraguay obtained through freedom of information requests, and data from the websites of two pharmaceutical manufacturers.

When inquired about the efficacy data for these licensed generic versions, regulators in Bangladesh, Paraguay, and Russia offered no response. Davone Duangdany, the director of the drug and medical device control division within the Laos Ministry of Health, stated that such information was confidential. Additionally, regulators in Bangladesh, Laos, and Russia did not promptly reply to Reuters' inquiries regarding the rigor of their drug approval, development, manufacturing, and distribution processes.

Jorge Lliou, the head of Paraguay's National Directorate of Health Surveillance, assured Reuters that the highest standards were applied in the approval of two Paraguayan medicines, akin to the process for any other product. The escalating number of licensed generics could lead to a decrease in the prices of anti-obesity medications and potentially impact significant markets like India, where Novo Nordisk has already launched Rybelsus, according to three pharmaceutical experts.

Anna Kemp-Casey, a medical policy specialist at the University of South Australia, suggested that the prices for Novo Nordisk's and Eli Lilly's weight-loss medications would initially remain stable due to the current overwhelming demand outpacing supply. However, she added that in the long run, the increased competition is likely to exert downward pressure on prices for both companies in India and other nations.

Both pharmaceutical companies are in a race to expand their manufacturing capabilities to meet the unprecedented demand. With over a billion individuals worldwide classified as obese—a condition associated with numerous severe health issues—BMO Capital Markets has projected annual weight-loss drug sales to reach $150 billion by 2033. The proliferation of generic versions could ultimately erode the revenue streams of Eli Lilly and Novo Nordisk, whose stock prices have skyrocketed due to the robust demand for new weight-loss tablets and injectable devices containing substances that mimic the effects of a hormone that slows digestion and promotes satiety.

Concentrated on countries where Novo Nordisk does not hold a patent on semaglutide, those benefiting from patent exemptions under World Trade Organization (WTO) rules due to their developing economy status, or regions like Russia, where local decrees override such international regulations.

"The approval of generic drugs by less-stringent regulatory bodies provides a legal framework for local manufacturers to produce these medications for domestic consumption and export," explained Enrique Seoane-Vazquez, a pharmaceutical policy specialist at Chapman University in California. Ozempic, initially developed to combat diabetes but gaining global popularity due to its unintended weight-loss effects, has become a substantial revenue generator for Novo Nordisk, with sales reaching 95.7 billion Danish crowns ($13.5 billion) in 2023. Eli Lilly's Mounjaro achieved sales of $5.1 billion last year.

Eli Lilly, when questioned about the generics identified, stated that tirzepatide is a complex macromolecule necessitating thorough testing. "Any policies for the approval of biosimilar products present significant patient safety concerns. Regulators should proceed cautiously, prioritizing patient safety," the company said in a written statement.

A spokeswoman for Novo Nordisk declined to comment on the potential risks of price competition from generics originating from Bangladesh, Laos, Russia, and Paraguay. When asked if Novo Nordisk planned to apply for a patent in Paraguay, which does not qualify for an exemption as it does not meet WTO criteria, the spokeswoman indicated that the Danish company does not seek patent protection in every nation globally.

Reuters previously reported that two generics of Novo Nordisk's weight-loss and diabetes drugs, Orsema and Fitaro, had been approved in Bangladesh. Some of the injector pens were confiscated at the border in a wealthier country where Ozempic's patent is protected, the UK, as shown in the same report.

The patent for semaglutide held by Novo Nordisk is set to expire in 2031 in Japan and Europe and in 2032 in the United States, but as early as 2026 in China and India, according to the company's latest annual report and industry experts. Eli Lilly stated in its annual report that its tirzepatide patent will expire in 2036 in the United States, with later expirations in other major economies.

The approved generics identified in the review are generally much more affordable than their branded counterparts. For instance, in Russia, a month's supply of Semavic, used for diabetes treatment and containing semaglutide, costs 4,420.20 Russian rubles ($42.76), according to local manufacturer Geropharm. This is 24% less than the cost of a month's supply of Ozempic in Russia, as informed.

In Bangladesh, a pack of Incepta Pharmaceutical's Orsema is priced at 350 or 600 Bangladesh taka ($3 or $5), as per local online medicine information directory Medex. In contrast, a month's supply of Ozempic had a U.S. list price of $935.77 in September, while the weekly injection costs around $100 for each 3mL dose through China's public hospital network. Novo Nordisk has not launched Ozempic, Wegovy, and Rybelsus in Bangladesh, as confirmed by a Novo Nordisk spokesperson to Reuters.

Due to its affordability, Semavic is attracting potential customers from abroad. "We have noticed increased interest in the medication not only in Russia but also from foreign partners and colleagues, with inquiries ranging from (a group of former Soviet republics) to Latin America," Geropharm said in response to Reuters' queries about overseas exports of Semavic.

Chirantan Chatterjee, an economist at the University of Sussex in Britain, suggested that the growing significance of the obesity issue may also prompt regulators in parts of Asia to request Big Pharma to lower their prices. "The direction of travel is therefore more competition, lower prices, enhanced choices, and consumer welfare expansion in this area," Chatterjee concluded.