Novo Nordisk A/S (NYSE:NVO) is facing a significant challenge in China, where local pharmaceutical companies are developing generic versions of its key diabetes and obesity drugs.
What Happened: As reported by Reuters on Sunday, at least 15 Chinese drugmakers are working on generic versions of Novo Nordisk’s drugs Ozempic and Wegovy. The patent for the active ingredient in these drugs is set to expire in China in 2026.
Novo Nordisk, a Danish pharmaceutical company, is currently embroiled in a legal battle over the patent in China. An adverse court ruling could lead to an earlier loss of patent protection for the drugs in China, making it the first major market to strip Novo Nordisk of its patent protection.
Chinese drugmakers have been quick to seize this opportunity, with several companies already in the final stages of clinical trials for their generic versions of Ozempic and Wegovy. The patent expiry in China is significantly earlier than in other key markets, such as Japan, Europe, and the U.S.
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Why It Matters: The Chinese market is crucial for Novo Nordisk, as it has the highest number of overweight or obese individuals globally. The company has seen a surge in sales of Ozempic in the greater China region, doubling to 4.8 billion Danish Krone ($698 million) last year, following its approval in China in 2021, according to the report.
Why It Matters: The potential influx of generic versions of Ozempic and Wegovy in China comes at a time when Novo Nordisk is facing scrutiny over the high prices of these drugs. The company has attributed the high prices to the U.S. health system and has expressed willingness to work with lawmakers to address systemic issues.
Novo Nordisk’s success has been largely driven by the sales of Ozempic and Wegovy, with the company’s market cap exceeding Denmark's entire GDP. The portrayal of Ozempic as a luxury drug only affordable to the wealthy, as highlighted in a South Park special, has sparked discussions about its accessibility.
With the global market for weight-loss drugs expected to reach $150 billion by the early 2030s, the increased supply and emergence of new competitors could significantly impact Novo Nordisk’s market share.
What’s Next: Novo Nordisk has acknowledged the increasing competition in China and is awaiting a court decision on its patent case. The company’s executive vice president, Maziar Mike Doustdar, has also expressed skepticism about the capabilities of some of the Chinese players to provide meaningful volumes, reported Reuters.
Despite the potential threat from local drugmakers, Novo Nordisk also faces competition from internationally well-known firms, including Eli Lilly and Co (NYSE:LLY), whose diabetes drug Mounjaro received approval in China in May.
Novo Nordisk’s stock has been performing well, with a year-to-date increase of over 36% and a 52-week range of $75.56 to $142.41.
Price Action: On Wednesday, Novo Nordisk shares closed 0.8% higher at $141 and gained 0.2% in the after-hours trading, according to Benzinga Pro data.
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This story was generated using Benzinga Neuro and edited by Shivdeep Dhaliwal
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