The FDA's Green List and Its Implications for the GLP-1 Drug Supply Chain

The U.S. Food and Drug Administration’s (FDA) Green List initiative for GLP-1 active pharmaceutical ingredients (APIs) has emerged as a pivotal regulatory framework in 2025, reshaping the supply chain for obesity and diabetes treatments. By prioritizing patient safety and supply chain integrity, the Green List has created both challenges and opportunities for manufacturers and investors. This analysis explores the implications of the Green List for approved API producers and identifies investment prospects in a sector poised for transformation.

The Green List: A Regulatory Baseline for GLP-1 APIs

The FDA’s Green List, launched in 2025, restricts the importation of GLP-1 APIs to facilities deemed compliant with U.S. manufacturing standards. As of September 2025, over three dozen foreign manufacturers have been evaluated, with 21% found noncompliant due to inadequate records or refusal to cooperate with inspections [1]. APIs from noncompliant sites face detention without physical examination (DWPE), a measure aimed at curbing adulterated or improperly manufactured ingredients [2].

The Green List’s criteria are stringent: manufacturers must submit extensive documentation, including certificates of analysis, process validation reports, and equipment specifications, to demonstrate adherence to current Good Manufacturing Practice (CGMP) requirements [1]. This rigorous process ensures that only APIs from verified facilities enter the U.S. market, safeguarding patients from the risks of compounded GLP-1 drugs, which have been linked to overdosing and hospitalizations [3].

Impact on Key Players: Novo Nordisk, Eli Lilly, and Beyond

The Green List’s implementation has directly affected major pharmaceutical firms. Novo Nordisk, whose Wegovy and Ozempic dominate the GLP-1 market, has filed over 130 lawsuits against compounding pharmacies distributing unapproved versions of its drugs. Despite resolving drug shortages, the company estimates that 1 million U.S. patients are using compounded GLP-1s, eroding its market share and profitability [6]. Similarly, Eli Lilly faces competition from compounded Mounjaro and Zepbound, though its Q1 2025 revenue from these drugs exceeded $6.1 billion, reflecting strong demand [2].

Both firms are lobbying the FDA to add their GLP-1 drugs to the Demonstrable Difficulties for Compounding (DDC) list, which would restrict compounding due to formulation complexity. This move underscores the tension between brand-name manufacturers and compounding pharmacies, with the FDA’s proposed DDC criteria emphasizing formulation and dosage challenges [3].

Investment Opportunities in Compliant API Producers

While the Green List’s names remain confidential, industry trends and financial performance highlight potential investment targets. WuXi AppTec, for instance, reported a 24.9% year-over-year revenue increase in Q2 2025, driven by successful FDA inspections at its manufacturing sites and capacity expansion in API production [4]. Similarly, Teva Pharmaceutical Industries saw a 5% revenue growth in Q1 2025, fueled by its innovative portfolio, including GLP-1-related therapies [5].

Emerging players like Biocon are also gaining traction. The Indian firm is advancing semaglutide through Phase III trials, aiming for a 2027 launch in India. Leveraging its expertise in insulin, Biocon is positioning itself as a cost-effective provider of GLP-1 therapies in a market projected to grow at a 6.65% CAGR through 2033 [4].

Strategic Shifts: Onshoring and Regulatory Relief

The Trump administration’s May 2025 executive order to bolster domestic pharmaceutical manufacturing has further reshaped the landscape. By reducing regulatory barriers and incentivizing onshoring, the policy aligns with the FDA’s Green List goals. AstraZeneca’s $50 billion investment in U.S. manufacturing by 2030, including a Virginia-based facility for chronic disease treatments, exemplifies this trend [5]. Meanwhile, the FDA’s PreCheck program streamlines domestic facility approvals, potentially boosting U.S.-based API producers [1].

However, challenges persist. Staffing shortages at the FDA—51 investigator vacancies in 2025—threaten consistent oversight of foreign facilities [3]. Additionally, tariffs on Chinese APIs (up to 35%) and reliance on Indian manufacturers complicate supply chain resilience [5].

Conclusion: Navigating Risk and Reward

The FDA’s Green List has redefined the GLP-1 supply chain, prioritizing safety over speed. For investors, the focus should remain on manufacturers with proven compliance, robust R&D pipelines, and alignment with U.S. regulatory priorities. While the sector faces headwinds—such as compounding proliferation and geopolitical supply chain risks—the long-term outlook remains bullish. Companies like WuXi AppTec, Teva, and Biocon, alongside domestic players leveraging onshoring incentives, offer compelling opportunities for those willing to navigate the evolving regulatory landscape.

Source:
[1] FDA Launches Green List to Protect Americans from Illegal ... [https://www.fda.gov/news-events/press-announcements/fda-launches-green-list-protect-americans-illegal-imported-glp-1-drug-ingredients]
[2] Eli Lilly stock slips despite earnings beat, reaffirmed 2025 ... [https://www.aol.com/finance/eli-lilly-stock-slips-despite-125448799.html]
[3] FDA's Concerns with Unapproved GLP-1 Drugs Used for Weight Loss [https://www.fda.gov/drugs/postmarket-drug-safety-information-patients-and-providers/fdas-concerns-unapproved-glp-1-drugs-used-weight-loss]
[4] US$400+ Billion Active Pharmaceutical Ingredients (API) Market Analysis 2033 [https://www.businesswire.com/news/home/2025040852398/en/US%24400-Billion-Active-Pharmaceutical-Ingredients-API-Market-Analysis-2033---ResearchAndMarkets.com]
[5] AstraZeneca plans to invest $50 billion in America for ... [https://www.astrazeneca.com/media-centre/press-releases/2025/astrazeneca-plans-to-invest-50bn-dollars-in-the-us.html]
[6] Novo Nordisk expands legal action to protect US patients from unsafe, non-FDA-approved compounded "semaglutide" ... API imported from facilities ... [https://www.prnewswire.com/news-releases/novo-nordisk-expands-legal-action-to-protect-us-patients-from-unsafe-non-fda-approved-compounded-semaglutide-302522326.html]