Novo Nordisk has initiated legal proceedings against Hims and Hers Health, alleging patent infringement after the American telehealth company introduced and subsequently withdrew a $49 copycat version of Novo's widely used weight-loss medication, Wegovy. This lawsuit represents a significant escalation in the ongoing price conflict among manufacturers of obesity treatments.
Legal Battle Over Compounded Medications
The legal action, which encompasses Novo Nordisk's weight-loss drugs in both pill and injectable formats, underscores the growing tension between original drug manufacturers and pharmacies that compound active ingredients. This practice has been cited as detrimental to the financial performance of pioneering pharmaceutical firms.
"There is now a growing chorus of parties that have said, enough is enough on the compounding situation in the United States," stated John Kuckelman, Novo Nordisk's general counsel, in an interview with Reuters. He described the launch of Hims' pill as a critical "tipping point" in the dispute.
Hims & Hers Responds to Allegations
In a robust rebuttal, Hims & Hers characterized the lawsuit as a "blatant attack" by Novo Nordisk on "millions of Americans who rely on compounded medications for access to personalized care." The company further accused "Big Pharma" of "weaponizing the U.S. judicial system to limit consumer choice."
The market reacted swiftly to the news, with Novo Nordisk's shares surging nearly 6% on Monday, while Hims & Hers experienced a sharp decline of 25% during morning trading. This followed a previous downturn for Novo and its competitor Eli Lilly last week, triggered by Hims' introduction of the low-cost pill, which threatened to undermine Novo's revenue and its strategic pivot towards a consumer cash-pay market.
Broader Crackdown on GLP-1 Compounders
Industry analysts have suggested that the lawsuit, coupled with an unusually prompt response from the U.S. Food and Drug Administration, may signal a wider regulatory clampdown on compounded GLP-1 medications. Such a move could alleviate competitive pressures on the patented weight-loss treatments offered by major manufacturers.
"They are not only declaring war on Hims & Hers' Wegovy pill, but GLP-1 compounders in general," observed Sydbank analyst Soren Lontoft Hansen. Novo Nordisk has explicitly stated that it is "asking the court to permanently ban Hims from selling unapproved, compounded drugs that infringe our patents, and is seeking to recover damages."
Regulatory Framework and Market Dynamics
Under U.S. regulations, compounding pharmacies are permitted to produce and distribute certain brand-name medicines when there is a documented shortage. In the absence of a shortage, compounding is only allowed for personalized patient needs, such as specific dosages not available in branded products.
Hims & Hers, whose pill was formulated using semaglutide—the active component in Novo Nordisk's flagship drugs Wegovy and Ozempic—announced on Saturday that it would discontinue offering the treatment. This decision followed the FDA's declaration on Friday that it would restrict the use of GLP-1 ingredients in non-approved compounded drugs, a move that helped rejuvenate Novo's share price.
Competitive Landscape and Future Outlook
Despite this regulatory support, fierce competition persists in the rapidly evolving GLP-1 market. Eli Lilly and various compounding pharmacies continue to offer injectable versions of semaglutide, maintaining pressure on Novo Nordisk.
Novo Nordisk's market valuation has plummeted by nearly 50% over the past year, with its stock dropping 17% in a single day last week after the company highlighted "unprecedented price pressure." These recent challenges illustrate how swiftly Novo's once-dominant position in the obesity drug market has eroded.
With Eli Lilly's oral GLP-1 pill, orforglipron, anticipated to receive FDA approval in April, competition is poised to intensify further. In the crucial U.S. market, the obesity medications developed by Novo Nordisk and Lilly are catalyzing a shift towards a consumer-centric model, where pharmaceutical companies are increasingly exploring cash-pay channels and telehealth services to reach millions of Americans.
Notably, both Novo Nordisk and Lilly have secured high-profile pricing agreements with U.S. President Donald Trump, and their weight-loss drugs feature prominently on the newly launched TrumpRx discounted-drugs website. Markus Manns, a representative from Novo and Lilly shareholder Union Investment, commented, "I think the FDA made it quite clear that they would not tolerate a compounded Wegovy pill. This was an attack on the authority of the FDA." Meanwhile, Lilly's shares, already hovering near record highs, saw an approximate 1% increase.
