Novartis Warns of Generic Drug Impact on Wegovy Sales, Plans Legal Action

Novartis, a leading pharmaceutical company, has expressed concerns over the impact of generic drugs on the sales of its flagship product, Wegovy. The company has indicated that it may take legal action against companies suspected of infringing on its intellectual property rights. The U.S. Food and Drug Administration (FDA) had previously allowed compounding pharmacies to produce generic versions of Wegovy and Ozempic due to drug shortages. However, with the shortage situation now resolved, the FDA has mandated that these compounding pharmacies cease production.

The rapid development of the compounding drug industry in the United States has significantly affected the sales of Novartis' semaglutide product, Wegovy. The company has warned that it will consider legal action against any companies found to be infringing on its intellectual property rights. This move by Novartis underscores the intense competition and legal battles that often arise in the pharmaceutical industry, particularly when it comes to protecting innovative drugs from generic competition.

Novartis' CEO, Lars Fruergaard Jørgensen, emphasized during the company's annual shareholder meeting that the efforts to increase the supply of the popular weight-loss drug have successfully removed it from the drug shortage list. However, he noted that the growth of the compounding drug industry has impacted the prescription volume of Wegovy for 2025. Jørgensen also mentioned that the company is taking legal action against compounding pharmacies, asserting that they are infringing on Novartis' intellectual property rights, thereby harming the company's business.

This dispute has led to legal conflicts between Novartis and the compounding pharmacy industry, represented by the Outsourcing Facilities Association (OFA). The OFA has criticized the FDA's decision to end the drug shortage designation as "reckless and arbitrary," arguing that it will deprive patients of important treatments for conditions such as type 2 diabetes, obesity, cardiovascular diseases, and other serious illnesses.

Despite the FDA's mandate, the demand for compounded obesity drugs has surged due to the high cost and limited supply of branded treatments. Companies like Hims & Hers have contributed to this demand, although their products have not been approved by the FDA, meaning they have not undergone safety, efficacy, or quality reviews before being marketed.

Jørgensen revealed that Novartis' analysis has detected impurities and even illegal substances in some compounded products, although he did not name any specific manufacturers. He stressed that these compounded alternatives are not the same as semaglutide, and patients should verify the product before injection. This warning aligns with an earlier alert from the FBI, which found that counterfeit compounded weight-loss drugs claiming to contain semaglutide actually contained unknown drug mixtures, high levels of impurities, and unsafe or unapproved drugs.

Jørgensen expressed optimism that as supplies become more abundant, patients will return to using branded Wegovy and Ozempic for treatment. In an effort to attract users back from cheaper generic alternatives, Novartis recently launched a new direct-to-consumer online pharmacy offering Wegovy at nearly half the price. Jørgensen hopes that many patients will choose Novartis' products once the supply issues are resolved.

Novartis has been working to reassure investors of its continued market leadership amidst intensified competition and a series of disappointing obesity drug trials that have affected its once-high stock prices. The company reported better-than-expected net profits for the fourth quarter, driven by surging demand for Wegovy, but forecasted a slight slowdown in sales for 2025.