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Highlights
- The FDA has removed Eli Lilly’s popular weight-loss and diabetes drugs from its shortage list, reducing the market for compounded alternatives.
- The removal follows efforts by Eli Lilly to increase supply, especially for Zepbound, as the company seeks to meet high demand and combat unauthorized compounded versions.
- Rival drugs from Novo Nordisk remain in short supply, keeping demand high for compounded medicines in the diabetes and weight-loss treatment space.
In Healthcare Sector Eli Lilly received important news this week as the U.S. Food and Drug Administration (FDA) removed its blockbuster diabetes and weight-loss drugs from the agency’s shortage list. The FDA's decision is likely to have a significant impact on the market for compounded versions of these drugs, which have gained popularity during the supply shortage. The drugs in question, Mounjaro and Zepbound, are highly sought after for diabetes treatment and weight-loss management.
FDA’s Decision and Its Impact on the Market
Mounjaro had been on the FDA's shortage list since late 2022, while Zepbound was added in April 2023 due to unprecedented demand that exceeded supply. During the shortage, federal regulations allowed the production of compounded versions of these drugs to meet demand. Compounded medications are custom-made treatments created by altering drug ingredients, and their production is typically limited to circumstances when a drug is in short supply.
The removal of Eli Lilly (NYSE: LLY)’s drugs from the FDA shortage list signals improved supply and will limit the production of compounded versions. Under federal guidelines, compounded versions of drugs are no longer permitted when the original drug is available in sufficient supply, making it more difficult for third-party compounders to produce and distribute these treatments.
Eli Lilly’s Efforts to Boost Supply
To address the overwhelming demand for its diabetes and weight-loss medications, Eli Lilly has ramped up production and started selling vials of the lowest dose of Zepbound directly to consumers in the United States. This initiative has helped improve drug availability and contributed to the FDA’s decision to remove the drugs from the shortage list. Lilly’s investment in expanding its production capacity also plays a critical role in meeting the surging demand, ensuring that patients have access to these treatments without turning to compounded alternatives.
Meanwhile, Novo Nordisk’s rival treatments, including Ozempic and Wegovy, remain on the FDA’s shortage list. This means the demand for compounded versions of Novo Nordisk’s drugs is likely to remain strong until the company can similarly address supply issues.
Industry Response and Legal Implications
The FDA’s decision is expected to reshape the market for compounded drugs. With Eli Lilly’s medications now removed from the shortage list, the drugmaker has a clearer path to taking legal action against those producing compounded versions of its treatments. Eli Lilly’s improved supply will likely put pressure on companies that have benefited from selling compounded alternatives, particularly in a market where demand has surged.
The FDA’s removal of Eli Lilly’s drugs from its shortage list marks a significant shift in the weight-loss and diabetes treatment market. As supply stabilizes, the industry can expect a reduction in the production of compounded versions, reinforcing the importance of maintaining adequate drug availability to meet consumer needs.
