Manufacturers of diabetes and weight-loss drugs, Novo Nordisk (NYSE:NVO) and Eli Lilly (NYSE:LLY), responded to a column by President Biden and Senator Bernie Sanders in USA Today that called for lower drug prices.
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President Biden and Senator Sanders’ View About High Drug Prices
The column specifically targeted Novo Nordisk (maker of Ozempic and Wegovy) and Eli Lilly (maker of Mounjaro and Zepbound) for high prices. The politicians indicated that if these companies don’t lower their drug prices, they will be forced to do so. Additionally, Biden and Sanders wrote, “Novo Nordisk must substantially reduce the price of Ozempic and Wegovy.”
Moreover, the column cited a study from Yale University researchers advocating for lower drug prices. This study found that these drugs could be manufactured profitably for less than $5 a month, or $57 per year.
NVO and Eli Lilly’s Response
In response, the two drugmakers stated that the issue is far more complex due to the U.S. drug pricing system.
Novo Nordisk stated to Yahoo Finance that the difficult and complex pricing of U.S. drugs “is being oversimplified and mischaracterized for political purposes.” Eli Lilly also called the criticism unfair. Both companies pointed out that despite high list prices for these drugs in the U.S., most Americans can access the drugs for $25 with savings cards or insurance. The monthly list prices for these injectable drugs have been at or over $1,000.
Novo added that the prices of its weight loss drugs, Ozempic and Wegovy, have dropped by 40% since their launch, but unfortunately, “patients in the United States often don’t receive the savings — this is a problem.”
These weight-loss drugs are expected to generate sales of $26 billion for Novo Nordisk in FY24, while Mounjaro and Zepbound could bring in $13.5 billion in revenue for Lilly, according to a Bloomberg report.
Is Eli Lilly a Buy, Sell, or Hold?
Analysts remain bullish about LLY stock, with a Strong Buy consensus rating based on 16 Buys and three Holds. Over the past year, LLY has skyrocketed by more than 90%, and the average LLY price target of $896.83 implies a downside potential of 1.1% from current levels.
