Eli Lilly (LLY.N) announced on Tuesday that it has reduced the price of its weight-loss drug Zepbound by $50 or more per vial. The company also expanded the available doses for purchase online, aiming to compete with compounding pharmacies and rival Novo Nordisk (NOVOb.CO).
This move comes at a crucial time as the competitive landscape in the lucrative weight-loss drug market begins to shift. Compounding pharmacies, which have been selling copies of Lilly’s Zepbound and Novo’s Wegovy during shortages, are now facing new challenges. The U.S. Food and Drug Administration (FDA) removed Zepbound from its shortage list in December and recently followed suit with Wegovy. The FDA has told compounding pharmacies to stop selling these copied drugs in the coming months.
In response, the Outsourcing Facilities Association, an industry trade group representing compounding pharmacies, filed a lawsuit against the FDA on Monday. The lawsuit challenges the decision to remove Wegovy and the diabetes drug Ozempic—both containing the same active ingredient—from the shortage list. This follows an earlier legal action related to the removal of Zepbound from the shortage list. The FDA has told compounding pharmacies to stop selling Zepbound and its generic versions, unless a court rules otherwise.
Telehealth company Hims & Hers Health (HIMS.N) warned on Monday that it may no longer be able to sell compounded weight-loss drugs, which caused its stock to drop nearly 26%. Meanwhile, other telehealth companies like LifeMD (LFMD.O) and Teladoc (TDOC.N) also saw stock declines, as the shortage situation continues to impact sales of compounded drugs.
Geoff Cook, CEO of Noom, a telehealth company selling compounded versions of Novo’s drug, noted that shortages of low doses of Wegovy remain an ongoing issue. However, analysts see Lilly’s move as a strategic one. Bernstein analyst Courtney Breen commented that Lilly’s price cut and expanded vial offerings will likely attract customers who are losing access to compounded drugs. As a result, Lilly’s stock rose 2.3% to $902.42.
Lilly’s new offering targets patients who opt to pay cash directly through the company’s website, offering a lower-cost alternative to compounded versions. In August 2024, Lilly began selling vials of two lower doses of Zepbound, which is typically sold in auto-injectors. The company’s price reduction means patients can now buy a month’s supply of these doses for $349 and $499, respectively. Lilly also offers 7.5mg and 10mg doses for $499 a month, nearly 23% cheaper than the $650 price for auto-injectors sold to uninsured patients.
Patrik Jonsson, President of Cardiometabolic Health at Eli Lilly, shared that over 10% of Zepbound patients have already chosen the vial option since its introduction.
Despite these efforts, compounding pharmacies still offer versions of Zepbound and Wegovy at lower prices, ranging from $231 to $330 per month. Hims & Hers anticipates generating $725 million in sales from its weight-loss business in 2025, even as it continues to offer personalized compounded drugs and generic versions of older weight-loss treatments from Novo Nordisk.
However, Citi analyst Daniel Grosslight expressed doubt about this forecast, highlighting that the company is relying on an optimistic sales boost from its alternative weight-loss products.
