Shares of Novo Nordisk and Eli Lilly slipped in afternoon trade after the former announced a reduction in the list prices of its weight loss drugs, Ozempic and Wegovy.
- Bank of America kept a ‘Buy’ rating on Eli Lilly’s stock, stating that a reduction in list price of Novo Nordisk’s weight loss drugs does not indicate that net pricing will also come down.
- It said that since most weight-loss drug demand is coming from customers who pay out of pocket, a reduction in list price is unlikely to impact Eli Lilly’s business.
- Bloomberg analyst Michael Shah echoed the same sentiment, stating that the reduction in list price is unlikely to translate into a reduction of net prices.
Shares of Novo Nordisk (NVO) and Eli Lilly (LLY) fell Tuesday after Novo unveiled plans to slash prices on key obesity and diabetes treatments by as much as 50%. Bank of America (BofA) dismissed the move as just a “flashy headline” that is unlikely to impact the U.S. market.
In a note to investors cited by TheFly, BofA said since reduction only impacts the listed price of Ozempic and Wegovy, it benefits just those with copay or co-insurance, and not those who pay out of pocket.
Hence, it is unlikely to impact Eli Lilly’s competing GLP-1 business, since most of the demand for the weight loss drug is from cash-paying customers and U.S. government programs, which won’t be directly impacted from the latest pricing move. BofA kept a ‘Buy’ rating on Eli Lilly’s stock.
“Taken in aggregate, the firm sees limited impact to Eli Lilly’s GLP-1 franchise given no clear indication Novo is moving more aggressively on lower net pricing in the commercial insurance channel, greater anticipated contribution from cash pay and U.S. government channels which are unimpacted by today’s update,” BofA said.
What Is Retail Saying?
NVO’s stock fell nearly 3% on Tuesday, while LLY’s stock closed down around 2%.
On Stocktwits, retail sentiment around NOVO’s stock remained in ‘extremely bullish’ territory over the past day, with chatter jumping to ‘extremely high’ from ‘high’ levels. Meanwhile, retail sentiment around LLY’s stock continued to trend in ‘neutral’ territory, with chatter at ‘normal’ levels.
One user said that Novo’s decision to cut prices is likely to seize market share from Eli Lilly.
Another said that Novo is in “panic mode” as competition with Eli Lilly rises.
LLY’s stock is down nearly 3% year-to-date, while NVO’s stock has fallen almost 24%.
Eli Lilly’s ‘Superior’ Weight Loss Drug
Bloomberg Intelligence senior pharma-biotech analyst Michael Shah echoed the same sentiment as BofA during an interview on Bloomberg Radio.
“It’s going to benefit patients with high deductibles, insurance plans or patients who have co-insurance plans where they’re paying a percentage of the list price,” Shah said. “You won’t see that sort of discount translate to the net price.”
He also noted that Eli Lilly has the “superior” product when it comes to weight loss drugs, citing a recent study around its experimental drug, CagriSema, that did not meet its key goal of showing that it wasn’t inferior to Eli Lilly’s tirzepatide.
Tirzepatide is the active ingredient in Eli Lilly’s rival weight loss drugs Mounjaro and Zepbound, which have overtaken Novo Nordisk’s semaglutide, sold as Ozempic and Wegovy, in the U.S.
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