Danish pharmaceutical giant Novo Nordisk has announced a plan to invest $4.1 billion (€3.8 billion) to expand its US manufacturing capacity. The new plant will be a second fill and finishing facility for high-in-demand weight loss drugs like Wegovy and Ozempic in Clayton, North Carolina.
Novo Nordisk's decision to invest in the US comes as part of its broader strategy to enhance its global manufacturing network. The medical firm states that: "Marking one of the largest manufacturing investments in Novo Nordisk's history, the expansion will add 1.4 million square feet of production space for aseptic manufacturing and finished production processes."
Early-stage work is already underway to prepare the 56-acre facility footprint, with construction expected to be completed between 2027 and 2029.
The new facility will add 1,000 new jobs on top of the 2,500 workers already employed at the three existing manufacturing sites in North Carolina, which serves as a production hub for the company. Novo Nordisk announced it would increase investments to approximately $6.8 billion (€6.3 billion), a 74% increase from the $3.9 billion (€3.6 billion) invested last year.
Demands for weigh-loss drugs outpace supply
Wegovy and Ozempic are in high demand due to their effective treatment for weight loss and diabetes. This class of drugs is commonly referred to as glucagon-like peptide-1 (GLP-1) agonists. In May, Novo Nordisk announced that the company had been increasing the supply of Wegovy, as at least 25,000 people were starting to take the medicine in the US, and the number has now risen to around 35,000. The rapid growth in demand has put its supply under pressure. According to the US Food & Drug Administration (FDA), Wegovy is limited in supply due to increasing demand, although Ozempic is available for injection.
One month ago, its biggest competitor, Eli Lilly, also announced an ambitious investment plan of $5.3 billion (€4.9 billion) at an Indiana site to boost the production of pharmaceutical ingredients (API) for its type 2 diabetes drugs, Zepbound and Mounjaro. This new plan brings Eli Lilly's total investment to $9 billion (€8.4 billion), the largest in the company’s 150-year history.
This phenomenon highlights the lucrative market for weight-loss drugs, which pushed the shares of both companies to all-time highs last week.
Novo Nordisk's sales of weight loss drugs doubled in Q1
Novo Nordisk's share price has surged 42% this year amid the fast-growing demand for Wegovy. In the first quarter, the drugmaker doubled its sales of weight-loss drugs to €125.7 billion, with profits surging 28% to €3.4 billion.
Revenue in the US jumped 35% as weekly prescriptions for Wegovy reached 130,000. Novo Nordisk has raised its outlook for 2024, expecting sales to grow between 19% and 27% at constant exchange rates. The company stated that demand for Wegovy and Ozempic is likely to outpace supply this year, implying that sales will grow as long as the firm increases production. Hence, an expansion in manufacturing capacity is likely to lead to further growth in the company's revenue.
In September 2023, Novo Nordisk surpassed French luxury powerhouse LVMH to become the most valuable company in Europe, thanks to the surging demand for its obesity drugs Wegovy and Ozempic. In February, Novo Nordisk's parent company, Novo Holdings, acquired the syringe maker Catalent for $16.5 billion (€15.4 billion) in cash, aiming to boost its filling and packaging capabilities for Wegovy and Ozempic. The deal allows Novo Nordisk to purchase three of Catalent's manufacturing fill-finish sites from Novo Holdings for $11 billion (€10.2 billion). This purchase is expected to help increase its filling capacity starting from 2026.
