Novo to spend $4B on US plant, adding to obesity drug production push

Dive Brief:

  • Novo Nordisk will spend $4.1 billion to build a new U.S. factory in North Carolina, the latest multibillion-dollar investment by the Danish drugmaker to expand production of its fast-selling weight loss and diabetes drugs Wegovy and Ozempic.
  • Funding for the planned factory, announced Tuesday, comes as Novo plans to allocate $6.8 billion towards manufacturing this year. The investments are designed to help the company expand access to its obesity medicines and fend off competition from Eli Lilly.
  • Novo last year budgeted $3.9 billion on production capacity expansions. It added even more bandwidth earlier this year, when its controlling shareholder agreed to buy contract manufacturing company Catalent and sell three plants to Novo in a separate transaction. Meanwhile, Lilly has committed $9 billion to facilities in Indiana.

Dive Insight:

Wall Street analysts believe the market for weight loss drugs like Wegovy and Zepbound could surpass more than $100 billion a year by the 2030s. But even now, manufacturers of marketed products are struggling to keep pace with demand. Novo limited access to the lower, “starter” doses of Wegovy for months, while some doses of Lilly’s Zepbound and Mounjaro are currently in shortage.

Demand is expected to grow in the years ahead, as Novo and Lilly bring their medicines into new indications and broaden insurance coverage. Novo showed in testing that Wegovy can help reduce the risk of cardiovascular events, winning Medicare coverage for some people. Lilly could similarly win over Medicare with recent results showing Zepbound can ease obstructive sleep apnea.

The two companies are also testing their medicines in other common conditions, like the metabolic disease known as MASH, heart failure and even Alzheimer’s.

In the meantime, Lilly and Novo are pouring considerable resources into drug production. The $9 billion Lilly is spending on facilities in Indiana is the largest single investment in its history. Now Novo is following suit with plans to significantly increase its production footprint in North Carolina.

Novo already has a large presence in the state, with three production plants there. But the new plant in Clayton will double its existing square footage. Foundational work has already begun on a 56-acre site, with construction expected to be finalized between 2027 and 2029. The facility will specialize in what’s known as fill-finish, or sterilizing and standardizing medicines and containers before filling and sealing them with drug products.

When completed, the new facility will add 1,000 new jobs to the roughly 2,500 the company already employs in the region.

The facility is the second in the U.S. the company has added this year. The Catalent transaction hands Novo a plant in Indiana, as well as manufacturing sites in Italy and Belgium.

In addition to its investment in Indiana, meanwhile, Lilly is buying a plant in Wisconsin.

This post has been syndicated from a third-party source. View the original article here.

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