As Ozempic Slims Waistlines, It’s Also Bulking Up Biomanufacturing Space
The eye-watering profit projections of a new class of weight-loss drugs has become a focus of biotech and Big Pharma, with companies jockeying to bring new drugs to market and expand production capacity for those that already have approval.
Even as the initial rollout of drugs like Ozempic and Wegovy has just begun, there are already signs their potential is rippling through financial markets and long-term real estate plans. The stock prices of firms like Amgen and Eli Lilly are reacting in real time to any news about the fate of their GLP-1 drugs, a class of synthetic peptides developed for diabetes that have been found to curb hunger and help with weight loss.
“The sky’s the limit, truly — it’s not hyperbole,” said Jake Adams, a project manager for CRB, a design, engineering, construction and consulting firm for biotech and life sciences. “This is the holy grail, the largest, most profound blockbuster drug of our generation. Published forecasts on this are all the way to the moon. They’ll probably never catch up to demand.”
Adams said he believes this market pressure will push pharmaceutical companies to expand and roll out their obesity drugs as fast as possible. A Stifel analysis found that since life sciences’ pandemic peak in February of 2021, nearly every subsector has lost market value, except Big Pharma, which has gained $637M in value, mostly propelled by gains by Eli Lilly and Novo Nordisk, due in significant part to the potential of their obesity drugs.
“I don't know that any large pharma group can sit on the sidelines,” Adams said. “I don't know that shareholders will tolerate that. There will continue to be a demand for drugs and manufacturing at a large scale.”
And many foresee more expansion to come. Analysts at Stifel, in their 2024 outlook, predicted that “obesity gets even bigger than we think it can as more data comes out.” Since these drugs are private pay and rarely reimbursed — at least for now — the market tilts heavily toward wealthy elites who can afford the treatment at an average of $270 per weekly dose.
But Stifel said once the drug reaches a wider audience, it will be “profoundly disruptive.” In addition, these drugs currently come in injectable form, which patients can shy away from. When an oral pill form of these treatments comes onto the market, it may broadly expand the number of users.
“Don't assume that you've missed the boat here,” Adams said. “Don't assume that no one else will try to enter this market and compete against Eli Lilly and Novo Nordisk.”
This potential all points to the need for scaled-up biomanufacturing capacity. Novo Nordisk CEO Lars Fruergaard Jørgensen told reporters during a January press conference, “There’ll be a demand that outgrows what can be produced by us and probably also competition.”
Novo Nordisk announced a deal this month to acquire Catalent, a significant contract drug manufacturer, for $16.5B, picking up three manufacturing plants that can be used for its GLP-1 drug Wegovy, which will take capacity offline for other pharma clients. The deal was on top of a planned $6.5B investment in 2024 and a $3.7B investment in 2023, according to Ambre James-Brown, Novo Nordisk’s vice president of media and digital global communication.
“This is not all for Wegovy, but will help with expanded capacity and active pharmaceutical ingredients for all of our medicines and pipeline,” he wrote in an email to Bisnow.
The challenge for building biomanufacturing capacity to meet this demand is the relatively slow speed at which these very expensive projects can be built. CRB senior fellow Dave DiProspero said that in a year or two, as demand explodes, “the trigger will have to be pulled” on new manufacturing projects. Existing biomanufacturing plants that aren’t being used are likely candidates for retrofits.
Adams also said as big as the obesity drug market may get, it’s just the beginning. The science of this kind of hormone modulation therapy is just beginning to be understood, and like mRNA, it’s likely researchers will invest in new theories and therapeutics based on this therapy, which itself might also create demand for more labs and R&D space for startups.
“The initial perspective would be, these GLP-1 drugs are built in megacampuses and huge facilities,” Adams said. “But I think that's probably short-sighted. There is going to be and will continue to be development of these types of drugs, and venture capital heading that direction.”
