Mizuho's Jared Holz: Novo Nordisk is trying to come up with strategies to regain market share

Key Concepts:

• GLP-1 drugs (Wegovy, Zepbound) for weight loss
• Market share competition between Novo Nordisk and Eli Lilly
• CVS Caremark formulary changes
• Drug pricing and patient access
• Drug tolerability and efficacy
• Oral weight loss medications

CVS Health's Formulary Change:

• CVS Health is prioritizing Novo Nordisk's Wegovy as its preferred GLP-1 drug.
• CVS Health is dropping Eli Lilly's Zepbound from its list of covered drugs.
• This change is a potential blow to Eli Lilly.

Market Share Dynamics:

• Novo Nordisk was previously the market leader in the obesity drug space but has lost significant market share to Eli Lilly.
• Eli Lilly currently holds two-thirds or more of all new patient starts on obesity drugs.
• Novo Nordisk is implementing strategies to regain market share.

Novo Nordisk's Strategy:

• Lower pricing is a key component of Novo Nordisk's strategy to convince CVS to switch.
• Offering alternative financing options to make the drugs more affordable for patients within the CVS network.

Impact on Patients:

• The deal affects approximately 100,000 to 200,000 patients on CVS Caremark plans.
• Some employers have already informed employees about the upcoming changes, while others have not.
• The impact may not be as widespread as initially perceived.

Switching Between Weight Loss Drugs:

• Tolerability is a significant factor in whether patients switch drugs.
• Patients who are satisfied with the weight loss progress and experience minimal tolerability issues are less likely to switch.
• Eli Lilly has gained market share due to the perceived higher efficacy and tolerability of its drug.
• Pricing has not been the primary driver of market share shifts thus far.

Oral Weight Loss Medications:

• The oral weight loss medication market is the space to watch.
• Eli Lilly is expected to be the first to market with an oral pill, anticipated approval about a year from now (early 2026).
• The efficacy of the oral pill may not be as significant as injectable drugs.
• Many patients are expected to try the oral pill due to its convenience and potential health benefits.

Conclusion:

The shift in CVS Health's formulary is a strategic move by Novo Nordisk to regain market share in the competitive weight loss drug market. While the impact on patients may vary, the focus on pricing and alternative financing options could influence patient access and drug selection. The future of the market hinges on the development and adoption of oral weight loss medications, with Eli Lilly poised to be a key player in that space.