Novo Nordisk and Eli Lilly shares plummet: the weight-loss pill will have a $49 copy

Shares of Novo Nordisk and Eli Lilly, makers of popular weight-loss drugs, fell in price after Hims & Hers, which owns a telemedicine platform, announced the launch of its own copy of the Wegovy slimming pill. And it will cost just $49 - three times cheaper than Novo's original, which investors had high hopes for.

At the end of trading in New York on February 5, American depositary receipts of the Danish pharmaceutical giant Novo Nordisk fell in price by 8.2%. Its American competitor Eli Lilly lost 7.8% of its value.

Investors sold off the securities of two makers of best-selling weight-loss products after telemedicine company Hims & Hers said it was launching a cheaper counterpart to Novo Nordisk's first Wegovy pill. The copy will cost $49 for the first month and $99 thereafter when you sign up for a five-month plan. Novo's drug costs $149.

The Danish company only brought the oral version of Wegovy to market in January, and initial sales data showed strong demand. Eli Lilly is still awaiting regulatory approval for its pill.

Novo has promised to take legal action against Hims, calling the telemedicine platform's actions "illegal bulk drug manufacturing that poses a significant risk to patient safety." The two companies have collaborated before: last year, Hims sold discounted weight loss injections from Novo to customers, but the partnership was terminated after two months due to the Danish manufacturer's claims of "deceptive" marketing by Hims, CNBC adds.

Leerink analyst Michael Cherney warned that this is unlikely to be the last low-cost analog of weight loss products. "Given the current legal environment, there is no reason why Hims should not consider similar launches for each successive overweight drug as the market evolves," he wrote .

Novo Nordisk warned this week that its revenue could fall 5-13% in 2026 due to increased competition for Ozempic and Wegovy, as well as pricing pressures in the US. The company's shares have since lost 15% of their value, and Denmark's largest pension fund ATP said it sees no opportunity to buy securities on the downturn, Bloomberg reported. ATP's vice president for equities, Klaus Berner Moller, said Novo's prospects are becoming increasingly uncertain, with recent forecasts confirming downside risks.

"I am concerned about the prices of weight loss products. I am also concerned about the possibility of price reductions in the coming years outside the US. The company needs new drugs that are more effective than existing drugs," he added.

Wall Street is more optimistic about Novo's prospects: 17 analysts out of 34 believe its securities are worth buying, MarketWatch data show. At the same time, 12 - took a neutral position, and five - recommend to sell. The average target price is $60.1, which implies a potential upside of almost 40%.

Sentiments concerning Eli Lilly are even more "bullish". Its shares are recommended to buy by 24 analysts out of 32. Only one expert suggests to sell them. At that, the average target of $1219 is only 10% higher than the current quotations.

This article was AI-translated and verified by a human editor