As the patent for Wegovy is set to expire in March, price competition is heating up in the Chinese obesity treatment market. The South China Morning Post (SCMP) reported on January 13 that Novo Nordisk had halved the price of Wegovy in southern regions like Yunnan and Sichuan towards the end of last year, prompting local companies to engage in price competition as well.
According to global strategic consulting firm L.E.K., more than 60 GLP-1 candidate compounds capable of competing with Wegovy and Eli Lilly’s Mounjaro are undergoing late-stage clinical trials in China. Chinese pharmaceutical company Innovent Biologics reduced the price of its drug Mazdutide by approximately 40% from the original 2,920 yuan earlier this month. Mazdutide is China’s first domestically approved obesity treatment, having received approval in June of last year.
Other Chinese companies like CSPC Pharmaceutical Group and Jiangsu Hengrui Medicine also have obesity treatments in the late clinical trial stages. Huadong Medicine’s oral treatment has completed Phase 3 clinical trials.
SCMP quoted Zhang Zhilin, Head of China Healthcare Research at Nomura, stating that multinational companies have aggressively lowered prices faster and more significantly than expected in order to compete in this market, with local companies following suit.
JP Morgan Chase’s researcher Yang Huang suggested that small Chinese GLP-1 pharmaceutical companies might not withstand the price competition and could exit the market sooner than expected.
Previously, Novo Nordisk and Eli Lilly both reduced the prices of their obesity medications, Wegovy and Mounjaro, in China starting December last year. The price of Wegovy, based on a high-dose weekly injection of semaglutide, fell from 1,900 yuan (~$300) to around 900 yuan (~$120). Mounjaro’s 10mg formulation, initially priced at 2,180 yuan (~$340), is now priced at 450 yuan (~$70), marking an almost 80% reduction.
The “half-price obesity drugs” strategy is aimed at maintaining market share as Wegovy’s patent expiration in March could lead to the emergence of generic drugs. Cui Cui, Head of Asia Healthcare Research at Jefferies, mentioned that in this highly profitable sector, manufacturers could absorb such price reductions to defend market share over profits.
The industry’s price war is also linked to the rapid increase in China’s obese population, with the medical journal The Lancet projecting an increase from 400 million in 2021 to 630 million by 2050. Tony Ren, Asia Healthcare Research Head at Macquarie Capital, said that Chinese pharmaceutical companies, lacking globally recognized efficacy results, would need to lower prices further, potentially transforming the obesity drug market into one focused more on consumer-driven entertainment and beauty.
Additionally, Novo Nordisk, which is expected to face the biggest impact from the introduction of generics, acquired global rights (excluding the Greater China region) to develop obesity, type 2 diabetes, and other metabolic disorder treatments from China’s United Laboratories for $200 million in March last year.