When Two Companies Worth More Than Denmark Hit Reality
The weight loss drug market is correcting, not collapsing
The June 2024 Peak Feels Like Ancient History
Everyone knew the valuations were stretched
In June 2024, Novo Nordisk's market cap exceeded Denmark's entire GDP. The stock had tripled in three years. Combined with Eli Lilly, the two companies have since shed $252 billion in value—roughly the GDP of Finland. The correction started with missed guidance. Eli Lilly came in $400 million below Q4 2024 expectations, despite 45% growth. Novo Nordisk cut its 2025 forecast twice in seven months.
Goldman Sachs has quietly revised their global market projection from $130 billion to $95 billion by 2030. The 27% reduction reflects new realities: faster price erosion, shorter patient treatment duration, and uncertainty around Medicare coverage. Each 1% change in annual price erosion knocks $6 billion off U.S. peak sales projections.
What's driving this recalibration? The drugs still work—patients lose 15-20% of body weight. But the business model supporting thousand-dollar monthly prescriptions is fracturing across multiple fronts.
Compounding Pharmacies Found Their Opening
Legal copies, not counterfeits
While headlines focused on Wegovy and Zepbound shortages, compounding pharmacies built a parallel market. Industry estimates suggest at least one million Americans currently take compounded GLP-1s. These aren't sketchy internet pills—they're legally produced under FDA shortage declarations that began in 2022.
The price differential is stark. Branded Wegovy runs $1,350 monthly. Compounded semaglutide costs as little as $200. Same active ingredient, produced by state-licensed pharmacies. The FDA plans to end this by May 22, 2025, requiring compounders to stop producing semaglutide. The Outsourcing Facilities Association has filed suit, arguing shortages persist despite FDA declarations. A Texas judge hasn't ruled yet.
According to data from Harris Beach Murtha, nearly half of online pharmacies offering GLP-1 medications may be operating outside standard quality guidelines. The FDA has received over 455 adverse event reports for compounded semaglutide and 320 for tirzepatide as of February 2025. But compounders are already adapting—some are shifting to "personalized" formulations that might bypass restrictions. Digital health platforms like Noom have lined up partnerships, betting the compound market survives in some form.
Price Competition Arrives Earlier Than Expected
The race to the bottom accelerates
March 2025 marked a turning point. Novo Nordisk cut Ozempic's cash price to $499 monthly—down 23% from $650. Eli Lilly had already moved, offering Zepbound doses at $349 through its direct platform. This isn't typical pharmaceutical competition; it's early-stage commoditization.
Goldman Sachs Research now models 7% annual price erosion for GLP-1s, up from their previous 2% assumption. J.P. Morgan Research still projects the market exceeding $100 billion by 2030, but that requires 30 million Americans taking these drugs—9% of the population. At current adherence rates, those projections require significant adjustments.
The pricing pressure comes from multiple directions. Manufacturers are launching direct-to-consumer programs. Insurance coverage remains inconsistent. And the specter of international competition looms—39 new GLP-1 drugs are in development from 34 companies, many based in China. Novo recently paid $2 billion to license a triple-agonist from Chinese firm United Bio-Technology, acknowledging it needs external help to stay competitive.
The Adherence Data Nobody Wanted to See
68% quit within a year
Prime Therapeutics analyzed real-world data from 4,255 commercially insured patients starting GLP-1s in 2021. At one year, 68% had stopped taking the medication. PwC's survey found non-diabetic patients plan to stay on GLP-1s for an average of 1.5 years, with side effects—primarily gastrointestinal issues—driving discontinuation.
The contrast with clinical trials is striking. FDA approval studies showed adherence above 85% in "highly managed" settings with extensive patient support. Real-world adherence in South Korea dropped to 15% after six months, according to research published in PMC. Prime Therapeutics found that patients who continued treatment had higher total healthcare costs at one-year follow-up.
The RAND Corporation's data adds perspective: 12% of Americans have tried GLP-1s, but only 6% currently take them. That's a 50% active user rate for medications marketed as transformative. Viking Therapeutics recently reported their experimental drug met efficacy goals but showed "higher-than-expected" dropout rates due to side effects, tempering investor enthusiasm despite positive results.
Medicare's Non-Coverage Defines the Market Ceiling
37% of seniors are overweight, 1% take GLP-1s for weight loss
Medicare cannot legally cover prescription drugs for weight loss. This isn't changing soon. Goldman Sachs previously estimated 70% probability of Medicare coverage expansion based on cardiovascular benefits. They've revised that to 50-50 odds. The current administration shows no appetite for adding tens of billions to federal spending.
According to KFF's May 2024 tracking poll, only 8% of adults over 65 have taken GLP-1s for any condition, and just 1% for weight loss. Six in ten adults support Medicare coverage for weight loss drugs, including majorities across party lines. But support doesn't translate to policy change.
Commercial insurance coverage remains fragmented. IQVIA data from early 2025 shows that in European markets, nearly 100,000 patients in Germany and Denmark each are paying out of pocket. In the UK, over 400,000 patients self-fund their prescriptions. Plans typically require prior authorization, BMI thresholds above 30, and documentation that other treatments failed. Even with coverage, copays often exceed several hundred dollars monthly.
The Next Wave of Competition
Seven launches expected by 2030
The pipeline tells the story. According to Ozmosi's analysis, 39 new GLP-1 drugs are in development from 34 companies. Only seven come from top-20 pharmaceutical companies. Many emerging players are Chinese firms unconstrained by U.S. pricing norms.
The first oral GLP-1 from a competitor is expected by 2027. Pfizer, Structure Therapeutics, and Carmot Therapeutics all have candidates advancing. Viking Therapeutics' VK2735 showed positive Phase 2 results, though dropout rates raised concerns. Risk-adjusted projections suggest seven actual U.S. launches by 2030.
GlobalData projects the global obesity market reaching $111 billion by 2033, down from earlier estimates of $125 billion. BMO Capital Markets sees $150 billion by early 2030s. Leerink goes higher at $158 billion by 2032. The wide range reflects fundamental uncertainty about adoption, pricing, and competition.
Manufacturing Capacity Versus Market Demand
Building for a boom that's moderating
Both Novo and Lilly are pouring billions into manufacturing expansion. Lilly committed $5.3 billion for additional production capacity. Novo Holdings' $16.5 billion acquisition of Catalent—pharma's largest M&A deal of 2024—aimed to secure manufacturing capability.
GlobalData notes the top GLP-1 drugs remain in shortage across the U.S., Europe, and Australia. But IQVIA data suggests the large-scale shortage opportunity for compounders is closing. The FDA removed tirzepatide from its shortage list in December 2024, with semaglutide expected to follow.
Fiona Barry, director of GlobalData's PharmSource, notes that "supply issues will remain a concern until additional manufacturing infrastructure comes online." The companies are building capacity for projected demand that may not materialize at expected price points.
Three Scenarios for 2025-2030
Managed Transition (Most Likely) The market grows to $70-80 billion globally by 2030. Prices decline 5-7% annually as competition increases. Novo and Lilly maintain 60-70% combined market share but at compressed margins. Compounders find ways to remain viable through regulatory adaptation. Insurance coverage improves incrementally but never becomes universal. Patient cycling—starting, stopping, restarting—becomes the norm rather than continuous treatment.
Accelerated Competition (Possible) Chinese companies successfully develop oral formulations with comparable efficacy. Prices drop to $200-300 monthly for branded drugs by 2028. Market volume expands but revenue disappoints relative to current projections. This mirrors insulin's trajectory—still significant but far below early projections. Biosimilar-style competition emerges before patent expiration.
Coverage Expansion (Less Likely) Medicare begins covering GLP-1s for cardiovascular indications. New formulations reduce side effects and improve adherence to 2+ years average. Commercial insurance standardizes coverage. The market reaches $120 billion by 2030. This requires multiple policy shifts that seem unlikely given current fiscal constraints and political dynamics.
What This Means for Stakeholders
For patients, increased competition and pricing pressure should improve access over time. The compound pharmacy lawsuit outcomes will affect near-term affordability. Long-term, the proliferation of options—oral formulations, new mechanisms, biosimilars—will drive prices down.
For investors, the $252 billion market cap reduction reflects appropriate recalibration. The companies aren't failing; they're being valued more reasonably. Focus should shift from revenue growth to margin preservation as competition intensifies.
For healthcare systems, the adherence data suggests these drugs won't solve the obesity crisis alone. Real-world discontinuation rates of 68% at one year indicate the need for comprehensive support programs, not just prescription access.
The Normalizing Market
The weight loss drug boom is transitioning from explosive growth to sustainable expansion. The drugs work, demand exists, but the economics are adjusting to reality. Thousand-dollar monthly prescriptions with limited insurance coverage and high discontinuation rates don't support $130 billion market projections.
What emerges will be more competitive, more accessible, and less profitable than early projections suggested. The June 2024 peak wasn't irrational exuberance—the drugs are genuinely transformative for many patients. But transformative medicine doesn't automatically translate to transformative investment returns when competition, pricing pressure, and real-world adherence enter the equation.
The GLP-1 market will be significant—likely one of the largest pharmaceutical categories by 2030. But it will look more like other competitive drug markets than the duopoly investors imagined. For patients, that's positive. For companies that built valuations exceeding entire national economies, it's a reminder that even breakthrough drugs eventually face market forces.