Shares of Novo Nordisk rose sharply on Thursday, gaining 8.3% in Copenhagen trading to reach 320 Danish crowns. The surge followed an announcement from digital health provider Hims & Hers that it is discontinuing plans to market a low-cost compounded semaglutide weight-loss pill priced at $49.
Regulatory Pressure Mounts
The decision comes amid increasing scrutiny from U.S. regulators concerning compounded versions of GLP-1 medications. The Food and Drug Administration recently signaled it would take enforcement action against mass-marketed compounded drugs containing semaglutide or tirzepatide that are not FDA-approved. Commissioner Martin A. Makary stated the agency is prepared to use "all available compliance and enforcement tools," including potential seizures and injunctions.
Hims & Hers cited "constructive conversations with stakeholders" as the reason for withdrawing the product. The U.S. Department of Health and Human Services has referred the matter to the Justice Department for potential legal action.
Market Implications
Investors have been closely monitoring whether lower-priced alternatives might challenge Novo Nordisk's pricing power in the lucrative obesity drug market. The Danish pharmaceutical giant's Wegovy and Ozempic medications, which contain semaglutide, have driven significant revenue growth. The removal of a potential low-cost competitor provides temporary relief from pricing pressure concerns.
However, competition remains intense. Eli Lilly confirmed it remains on schedule to launch its own oral weight-loss medication in April. Additional oral treatments in development could increase market access and potentially exert downward pressure on drug prices in the future.
Some analysts remain skeptical about whether regulatory actions will effectively curb demand for compounded alternatives. Bernstein's Christian Moore noted, "We do think people will still buy it, and don't think the government will do anything to stop it, based on precedent."
Traders are now watching for potential FDA and Justice Department moves in coming days, as well as whether other sellers might enter the market following Hims' exit. Novo Nordisk is scheduled to report first-quarter earnings on May 6.
