Novo Nordisk and Eli Lilly Slash Prices of Blockbuster Weight-Loss Drugs Amid U.S. Dealings

Shares in Novo Nordisk and Eli Lilly fell after announcing a price cut for GLP-1 weight-loss drugs as part of a U.S. government agreement. The reduction aims to boost future volumes despite a short-term revenue impact. Both companies anticipate long-term sales growth through increased Medicare access.

In a move that shook the pharmaceutical industry, shares in Novo Nordisk and Eli Lilly slipped following their agreement with the U.S. government to cut prices of their prominent GLP-1 weight-loss drugs. The new pricing strategy covers Novo's Wegovy and Lilly's Zepbound, significantly reducing monthly costs for government programs, including Medicare and Medicaid, from a range of $500 to $1,000 down to between $149 and $350.

This arrangement also grants both companies a three-year hiatus from tariffs. Despite the expected 'low single-digit' decline in global sales next year due to the price cuts, Novo foresees considerable sales volume growth in the mid to long-term, particularly under Medicare. Echoing this sentiment, Lilly's CEO, David Ricks, highlighted a strategic boost in volume sales despite the initial revenue hit due to price reductions, offering a net price of $245 for Zepbound compared to similar diabetes treatments.

As Novo faces mounting competition from Lilly's Zepbound and similar weight-loss drugs, the market dynamics continue to evolve. Despite Novo experiencing a value slump after once dominating the European market, analysts and insiders remain optimistic. While initial price concessions are immediate, the anticipated gains in sales volume might yield longer-term financial benefits for both Novo and Lilly, pending regulatory allowances for their upcoming weight-loss pill options.

(With inputs from agencies.)