The simultaneous patent expiration of Ozempic’s active ingredient in China and India on Friday is a significant moment. Until now, revolutionary weight loss drugs have been largely available only to the well-off. The entry of affordable generic versions will be a force majeure in healthcare with global consequences.
That’s because the world’s two most populous countries are not just consumers. They also have pharmaceutical companies that are able to exploit this moment to reshape the market for metabolic therapies – and impact the earnings of incumbents Novo Nordisk A/S and Eli Lilly & Co. This process is driven by the demands of a large domestic population suffering from chronic diseases such as obesity and diabetes, which can be treated with these new affordable drugs that mimic the effects of the natural hormone glucagon-like peptide-1 (GLP-1), which regulates appetite and blood sugar.
By far the biggest benefit will be to public health. According to the Lancet, five years ago, 402 million people in China were obese. This number will increase by 56% to almost half the population by 2050. In India, 180 million people were suffering from the disease in 2021, with this figure expected to more than double to 450 million in about 25 years. Obesity is known to increase the risks of diabetes, coronary artery disease, high blood pressure, stroke and other health conditions.
While Novo Nordisk has lowered the price of Vegovy in China and India in anticipation of patent loss – which uses semaglutide, the same ingredient in Ozempic, its offering is still too expensive for most people. In China, where weight-loss drugs are excluded from insurance coverage, price will be the deciding factor in whether millions of people will begin medical treatment.
Many diabetics are managing their condition with older, less effective medications. Nadim Anwar, pharma analyst at GlobalData, told me that switching to generic semaglutide could lead to better glycemic and weight control, reducing the risk of long-term complications. Competition can bring prices down to $50 a month, compared to hundreds of dollars in the West.
There are more than 10 companies in China, including CSPC Pharmaceutical Group Ltd. and Huisheng Biopharmaceutical, that are developing generic versions. Local media say that it will take another half a year for the medicines to become available. It is expected that India will have dozens of options in a few months.
Even though medicines are game changers, they are not a big deal. And getting them right can be difficult. The drugs have also been linked to muscle loss and even malnutrition. There is a question mark regarding depression. According to Johanna Ralston, chief executive of the World Obesity Federation, countries need to train health workers to provide long-term care to aid treatment and invest in prevention by encouraging exercise and proper nutrition. China and India’s chronically understaffed, underfunded health care systems may struggle to do this, but if the drugs become widely available, they will have to commit to comprehensive care.
What’s more obvious about these drugs is the potential commercial opportunity. Even though China did not originate GLP-1 treatments, it already dominates the research pipeline, with more than 100 drugs in development, according to Citeline’s PharmaProjects, about 40% of the global total. Over the past two years, therapies coming from China have accounted for the majority of global GLP-1-related dealmaking, both in terms of value and deal volume. In fact, Pfizer Inc. will soon enter the weight-loss drugs market after years of trying — by licensing a Chinese product after its own efforts failed.
This is no surprise to those following the pace of China’s pharmaceutical development. Over the past five years, drugmakers have begun launching experimental treatments and signing billion-dollar licensing deals to bring them to global markets. Established companies are looking for shortcuts to expanding their offerings – as many face an upcoming so-called “revenue crunch” as lucrative patents on blockbuster drugs expire.
And because semaglutide’s patent has already expired in Canada and is about to do so in Brazil and Turkey, Chinese and Indian generics could become major players if they receive regulatory approval. Since China is already the world’s largest supplier of active pharmaceutical ingredients, the ingredients in drugs that produce the desired therapeutic effects, its suppliers can make money in those markets as well.
Ozempic went viral in 2018 after it was introduced as a diabetes injection for helping people lose weight. The extreme effectiveness of this class of drugs has led to the idea that obesity is a chronic disease. Now affordable generics will not only make them more widely available, but also give Asian drugmakers a larger share of the growing business.
This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Juliana Liu is a columnist for Bloomberg Opinion’s Asia team, covering corporate strategy and management in the region. She was previously CNN’s senior business editor for Asia and a correspondent at BBC News and Reuters.
