- The demand for self-injection drugs for weight loss is increasing rapidly
- Analysts say the obesity market could be worth $100 billion within a decade
- Contract drug manufacturers are scrambling to expand their syringe-filling capacity
LONDON, Oct 9 (Portal) – Contract drugmakers seeking to tap the booming market for weight-loss drugs are investing billions of dollars to expand or build factories that fill the injection pens used to deliver treatments like those of Novo Nordisk can be used (NOVOb.CO) Wegovy.
Interviews with a dozen company executives, analysts and investors showed that pharmaceutical services companies struggled to secure more skilled labor to fill the syringes used in the pens, a process known as “fill-finish.”
“Any contract manufacturer that has sterile fill and finish capabilities is looking to add more to move forward because it’s not just about Wegovy anymore,” said Tejas Savant, senior healthcare equity analyst at Morgan Stanley. “Lillys Mounjaro and others are also coming.”
Sales of Wegovy, the first of a new generation of obesity treatments that mimic the body’s appetite-stimulating hormones, have surged since its launch in the U.S. in June 2021.
Eli Lilly’s (LLY.N) Mounjaro is expected to be approved for weight loss in the United States this year.
The weekly weight-loss injections are in a class of drugs known as GLP-1 agonists that analysts say could be worth as much as $100 billion within a decade, including oral treatments currently made by Pfizer (PFE. N) and others are developed.
Chris Chen, CEO of WuXi Biologics (2269.HK), told Portal his company is talking to customers about using the prefilled syringe capacity it is installing at a German factory it bought in 2020.
He described the interest as “quite strong” and said he wanted to buy more factories in Europe to serve GLP-1 customers, but gave no details.
Catalent is building “significant” pre-filled syringe capacity at factories in Anagni, Italy, and Bloomington, Indiana, in the U.S., said Cornell Stamoran, vice president of corporate strategy and government affairs. They will go online in 2024.
The US company is already carrying out filler work on Wegovy.
The race for contracts among contract development and manufacturing organizations (CDMOs) began last year. Since then, about half a dozen projects worth at least $3 billion have been announced by companies including Lonza (LONN.S), Fujifilm Diosynth Biotechnologies, a subsidiary of Fujifilm Corp, and Germany’s Vetter.
And as Lilly prepares to launch Mounjaro and Novo struggles to meet demand despite launching Wegovy in more markets, the pace is accelerating.
Another Novo partner, Thermo Fisher (TMO.N), is converting equipment used to fill COVID-19 vaccine syringes to handle pens for obesity and diabetes drugs, CEO Marc Casper said at a Morgan Stanley healthcare conference last month.
He said there is a huge shortage of capacity. A company spokesman declined to comment.
All companies surveyed by Portal declined to disclose terms of potential contracts or customers.
FROM COVID TO Obesity
Large drug manufacturers hire CDMOs when they lack internal expertise or size. The syringes are filled under sterile conditions to avoid contamination before the pens are assembled and packaged and then shipped from wholesalers to pharmacies and clinics.
Novo is spending billions to increase its own Wegovy production and plans to add more contract manufacturing sites in addition to the three sites operated by Catalent and Thermo.
Nevertheless, the shortage will continue into next year.
Lilly is also increasing internal capacity, but for now is leveraging an “extensive portfolio” of CDMOs, a spokesman said, without naming them. Studies with the drug Mounjaro showed greater effectiveness than Wegovy.
Research firm The Insight Partners predicts the fill finish market will more than double to $12.5 billion between 2019 and 2027. That’s about twice as fast as with tablets or capsules, said an industry expert.
New GLP-1 deals could more than offset the loss of COVID-19 vaccine contracts, executives said.
The US Inflation Reduction Act also encourages the development of biological drugs, some of which are injected. Injectables are increasingly being used in geriatric care, and some new Alzheimer’s and generic arthritis medications are being administered by injection.
However, according to the company, GLP-1 is the main reason for investment.
Many projects will not be completed until next year or, in some cases, 2026, so supply constraints are expected to continue. A healthcare investor said CDMOs’ ability to increase their capacity will determine how quickly the obesity drug market grows.
Meanwhile, Catalent and Thermo are “in the catbird seat” and leading the market because of their existing capacity, said Barclays analyst Luke Sergott.
According to LSEG data, Catalent shares currently trade at about 42 times expected earnings over the next 12 months – more than 28 for Lonza and 21 for Thermo, reflecting the company’s current dominance in the obesity race despite some quality issues. Portal reported in July that quality deficiencies at Catalent’s Brussels factory had led to Wegovy shortages.
Executives said the fight for capacity would not create a surplus.
“From my 30 years in the industry, CDMOs do not follow the ‘build it and they will come’ model. That’s not how you build a CDMO business over time,” said Catalent’s Stamoran.
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Reporting by Maggie Fick; Additional reporting by Patrick Wingrove in New York; Edited by Josephine Mason and Catherine Evans
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