Novo Nordisk devotes $6B to expanding production as CEO indicates more to come

As demand continues to surge for the Ozempic-Wegovy duo of diabetes and obesity meds, Novo Nordisk is investing heavily to boost production capacity.

Novo will shell out more than 42 billion Danish kroner ($6 billion) to expand its existing manufacturing facilities in Kalundborg, Denmark, the company said Friday.

The vast majority of the money will go toward increasing the capacity of active pharmaceutical ingredients, including the semaglutide used in Ozempic and Wegovy, which are both injected, as well as Rybelsus, the oral version of semaglutide used for diabetes. Successes of the GLP-1 therapies have repeatedly help break Novo’s revenue and market valuation records.

The investment features a new 170,000-square-meter (1.83 million-square-foot) API facility that will be able to make multiple products and accommodate future processes. Work on the expansion will begin this year, and construction will be finalized gradually from the end of 2025 through 2029, Novo said in a statement. 

Once fully equipped, the projects will create 800 new jobs. Novo currently boasts a manufacturing footprint in Kalundborg that includes an area of 1.6 million square meters and about 4,400 employees.

According to CEO Lars Fruergaard Jørgensen, the $6 billion won’t be the end of Novo’s manufacturing expansion.

“With the capacity we’re building and what competition is building, I believe we are far from getting to a billion people,” Jørgensen said, as quoted by Reuters. By the World Health Organization’s estimate, more than 1.9 billion adults worldwide were overweight in 2016, and the number has been rising.

“I believe we will continuously have to invest,” he told Reuters.

The competition Jørgensen mentioned is Eli Lilly. The U.S. pharma earlier this week won FDA approval for Zepbound for weight loss. Lilly’s tirzepatide franchise—Zepbound and diabetes med Mounjaro—is considered the primary competition to Novo’s semaglutide products.

Lilly is “aggressively planning” additional manufacturing expansions, CEO David Ricks said on the company’s third-quarter earnings call last week.

“We think that there is a need to take up parenteral incretin supply pretty dramatically from the current levels, and we plan to do that,” Ricks said.

The two companies are in a similar situation where surging demand keeps outstripping supply for their GLP-1 meds.

For Lilly, the Indiana company in April unveiled an additional $1.6 billion investment in new manufacturing sites in its home state. It followed a $450 million infusion into Lilly’s Research Triangle Park facility in North Carolina to ramp up capacity for incretin products including Mounjaro.

For its part, Novo has in 2021 and 2022 announced investments of 18 billion Danish Kroner ($2.6 billion) in building four new manufacturing facilities in Kalundborg and rebuilding three existing ones. The company’s total production investments in Denmark reached 40 billion Danish kroner in the past two years.

In addition to building up capacity within the company, Novo has also tapped contractors Catalent and Thermo Fisher to help make Wegovy. 

Besides diabetes and obesity, Novo has recently reported positive kidney and cardiovascular outcomes results for semaglutide. With additional effects on slowing the progression of chronic kidney disease and reducing heart attacks or strokes in certain diabetes or obese patients, semaglutide could potentially attract more patients.

More competition is brewing. AstraZeneca on Thursday unveiled a deal to license a GLP-1 agonist from China’s Eccogene. AZ sees the once-daily, oral med as a potential alternative to injectables like Ozempic and Mounjaro both as a monotherapy and in combination with other drugs.