alt Hacker NewsThis compares Ozempic with past drugs, but sales of past drugs are almost always limited by demand. I'm not sure there's much to learn here for a drug that is limited by supply. Also, this part is silly:
"The announced investments across both companies total $32 billion. GLP-1s were 71% of Novo’s revenue in 2023, 16% of Lilly’s in 2023, and 26% of Lilly’s in 2024Q1. If these sales are proportional to the manufacturing capacity used to create those drugs, then about 40% of Novo and Lilly’s combined estimate of $45 billion in gross PP&E is for GLP-1s, for a total of $18 billion; $25 billion would then mean a 140% increase in GLP-1-relevant PP&E."
Manufacturing investment is not proportional to sales, because there's a fixed cost to making a certain drug regardless of how much you sell. If a rare-disease drug will have a few thousand patients ever - not uncommon! - you still need to figure out a synthesis path for that particular drug, run QC tests on the production line, get regulatory approval, etc. Economies of scale matter a lot (https://en.wikipedia.org/wiki/Experience_curve_effects).
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I'm shocked that TFA doesn't mention the (massive, booming) market for compounded semaglutide and tirzepatide. The long-term future is uncertain, but since these drugs have been under shortage status, third-party pharmacies can legally compound them to meet increased demand.
Not fully true- orphan drug status exists for rare diseases and gives advantages to companies who develop drugs for rare conditions. This includes longer exclusivity periods amongst other incentives, rendering these categories more feasible economically.
Agreed. Don't forget they're spending on next-gen versions of these too -- Novo is testing a pill form that's apparently twice as effective as semaglutide(!) right now. It's easy to imagine that becomes part of many people's January routine -- stop drinking, take your pills, go to the gym for a month, slowly put the weight back on during the year, no problem.
And apparently the pure manufacturing cost for Ozempic is relatively low:
> the active drug in Ozempic can be produced for about 29 cents for a month’s supply, or 7.2 cents for a typical weekly dose, the research found. It’s not cheap to make — semaglutide costs over $70,000 per kilogram. But only a tiny quantity of the drug is used in each weekly dose.
> https://fortune.com/europe/2024/03/28/ozempic-maker-novo-nor...
I think this makes it likely that strongly ramping up the supply is not a major problem.