Novo Nordisk, a Danish drugmaker, has announced that it will invest $6 billion to expand production in Denmark. However, the CEO of the company, Lars Fruergaard Jorgensen, cautioned that the industry is still far from being able to meet the global demand for weight-loss drugs. Novo Nordisk has experienced great success with its anti-obesity drug, Wegovy, but has faced shortages that have limited patient access. The World Health Organization has labeled obesity as a “rising epidemic” and predicts that over 1 billion adults worldwide will be living with obesity by 2030. Jorgensen believes that with the current capacity being built by Novo Nordisk and its competitors, the industry is still far from reaching a billion people. He anticipates the need for continuous investment in the future.
In recent news, Eli Lilly’s weight-loss treatment has been approved by regulators in the US and the UK, while AstraZeneca has invested in licensing an experimental pill from China’s Eccogene. Analysts predict that the enormous demand for obesity drugs will drive annual sales to $100 billion within a decade, with up to 10 different drugs on the market. Jorgensen welcomes competition and believes that the approval of Eli Lilly’s drug will further stimulate market growth.
Novo Nordisk plans to allocate more than 42 billion Danish crowns ($6.0 billion) to expand its Kalundborg site in Denmark. This investment will increase capacity for manufacturing active pharmaceutical ingredients (API) and other parts of the supply chain, such as packaging. It will also enhance capacity for GLP-1 products like semaglutide, the API in Wegovy, and the company’s Ozempic diabetes treatment. Some of this investment was already included in a previously announced capital expenditure plan. However, increasing API production and fill-finish capacity may take at least three years, according to a healthcare banker.
Jorgensen clarified that while the focus of Friday’s announcement was on API production, Novo Nordisk will also invest in expanding capacity for fill-finish, which involves the injection pens used for Wegovy and Ozempic. The company plans to increase fill-finish capacity at its own sites worldwide and gradually expand its collaboration with contract manufacturers.
Novo Nordisk’s investment is the largest made by a private sector company in Denmark. The construction projects are expected to be completed between late 2025 and 2029. Despite the investment, Novo Nordisk’s shares were trading higher, outperforming the wider European stock market.
In conclusion, Novo Nordisk’s $6 billion investment aims to address the growing demand for obesity drugs. While the company has achieved success with Wegovy, it recognizes the need for continuous investment to meet global demand. The approval of Eli Lilly’s weight-loss treatment and AstraZeneca’s investment in an experimental pill from China’s Eccogene indicate the increasing competition in the market. Novo Nordisk’s expansion plans will boost production capacity for API and fill-finish, but it may take several years to fully realize these improvements.
