Novo Nordisk’s semaglutide achieved explosive sales in 2023. Ozempic alone generated $13,892 million in sales for the year. But now that Hims & Hers has revealed plans to sell compounded semaglutide to the masses, questions arise about how the Dutch pharma giant will respond.

2023 was a banner year for the firm with its diabetes and obesity care products, including Ozempic and Wegovy, accounting for 55% of total sales in 2023, generating combined revenue of $18.4 billion, up from $9.3 billion in 2022.

Now, Hims & Hers’ decision to sell compounded semaglutide at roughly 85% less the cost could have tangible implications for Novo Nordisk and other Big Pharmas. First, it threatens to erode red hot demand  for the branded drugs Ozempic and Wegovy, potentially putting Novo and Eli Lilly in a defensive mode to protect the sales of the latest crop of GLP-1s, which are some of best-selling drugs to emerge in recent memory.

More regulatory pressure likely

Novo Nordisk will likely sharpen its efforts to use regulatory actions to curb compounded semaglutide sales, playing up FDA safety and efficacy concerns for the practice. The company could also capitalize on those FDA warnings to reinforce the perceived safety and reliability of their branded products over compounded alternatives in consumers’ minds.

Novo Nordisk holds the exclusive patent on semaglutide, the active ingredient in Ozempic and Wegovy. While compounding pharmacies are generally allowed to produce compounded versions of FDA-approved drugs under certain circumstances (such as in a shorage), the FDA has raised concerns that some compounders are using unapproved semaglutide salt forms to produce versions claimed to be “semaglutide.” Several states have also warned compounding pharmacies against producing such unapproved semaglutide compounds, threatening legal action.

Other Big Pharma firms have also fought to protect market sure in similar cases

In the late 2000s and 2010s, major pharmaceutical companies deployed a range of strategies to protect blockbuster drug franchises from competition. Pfizer, for instance, aggressively litigated to defend its patents on the erectile dysfunction drug Viagra (sildenafil) and worked with the FDA to extend exclusivity until April 2020, only allowing Teva to launch a generic version in December 2017 after settling lawsuits and requiring royalty payments. From around 2015 to 2020, Amgen frequently sued and negotiated delayed entry dates with companies trying to market biosimilar versions of its products like Enbrel, such as settling with Johnson & Johnson to postpone a Stelara biosimilar launch until January 2025. In the early 2010s, Genentech sued compounding pharmacies that repackaged its cancer drug Avastin (bevacizumab) into smaller doses for off-label ophthalmic use. The firm argued these repackaged versions did not meet required safety and efficacy standards for that unapproved use.

Novo’s past aggressive defense of blockbusters

In any event, Novo Nordisk is likely to sharpen its efforts to use regulatory means to curb the sales of compounded semaglutide. The Danish company has a history of aggressively protecting its revenue streams from compounded pharmacies and generic companies, particularly concerning its blockbuster drugs like Ozempic and Wegovy. The company has repeatedly filed lawsuits against compounding pharmacies, alleging that they are producing and selling unauthorized, impure and subpotent versions of semaglutide, the active ingredient in these drugs. The company reached confidential settlements with two Florida businesses — Cosmetic Laser Professionals Med Spa and Nuvida Rx Weight Loss — that were selling compounded versions of semaglutide-based Ozempic and Wegovy. The settlements ban the businesses from claiming their products are FDA-approved, using Novo’s trademarks and engaging in misleading advertising. 

FDA warnings and supply shortages

The FDA has also played a role in the saga, warning against the use of compounded semaglutide given potential safety concerns. The agency does not review compounded drugs for safety, effectiveness or quality. The agency notes there have been reports of adverse events linked to these products. The FDA has discovered illegally marketed compounded semaglutide products online and is investigating reports of counterfeit Ozempic in the U.S.