- Novo Nordisk plans to invest $6 billion to expand its drug manufacturing capacity as it tries to meet skyrocketing demand for its popular obesity and diabetes medicines Wegovy and Ozempic.
- The investment, announced by the Danish drugmaker Friday, will be spread over the next six years and builds on the company’s existing capital spending plans. Most of the money will go toward building a new plant for making active pharmaceutical ingredients, like the semaglutide protein that’s contained in both Wegovy and Ozempic.
- Construction, which will also add a new packaging facility, is expected to be completed in phases from the end of 2025 through 2029, Novo said. Once finished, the company expects the production site will employ 700 staff, with another 100 working at the packaging plant.
Novo is making Ozempic and Wegovy as fast as it can, but still can’t match the ballooning demand for the drugs, which are respectively sold for Type 2 diabetes and weight loss.
Sales of Wegovy rose nearly six-fold over the first nine months of this year, compared to last, even as Novo has been forced to limit supply of starter doses for people newly prescribed the drug. “While supply capacity for Wegovy is gradually being expanded, the lower dose strength in the US will remain restricted to safeguard continuity of care,” said Karsten Munk Knudsen, Novo’s chief financial officer, on a Nov. 2 earnings call.
Analysts expect demand to continue to grow, too, particularly after Novo released clinical trial results showing Wegovy treatment can help reduce heart risk. The data could help improve treatment coverage by insurers, and convince physicians of the drug’s broader merit beyond weight loss alone.
Constrained supply is likely to temper that growth, however. “Don't look for a hockey stick. It's a gradual process where, of course, we will be starting at the lower doses and then increasing them as we move forward,” said Knudsen, of how supply will increase next year.
The $6 billion Novo now plans to pour into manufacturing capacity won’t help immediately, but position the company to lead a market that by some forecasts could reach $90 billion. It could also help as Novo faces new competition from Eli Lilly, which this week won U.S. approval of its similar-acting drug Zepbound for obesity.
“Our continued investment in global capacity demonstrates the belief we have in our current and future product portfolio and its relevance for people living with serious chronic diseases,” said Henrik Wulff, Novo’s head of product supply, quality and IT, in a statement on the expansion.
The new plant for active pharmaceutical ingredients will cover 1.8 million square feet and is being built to support multiple products, including GLP-1 drugs like Wegovy and Ozempic. It will be located in Kalundborg, a coastal city in Denmark that’s been home to Novo’s manufacturing plants since 1969. More than 4,000 employees currently work at the site.